Covid-19 lock-down business news update 22 May 2020.
22 May 2020.
James Salmon, Operations Director.
The Covid-19 lock-down continues and we are having to make do in a new normal.
Here are CPA we want to share the business news stories we have seen that we think will affect our members and readers. Many of us are busy fighting to protect our businesses and therefore might have missed some of the news that could impact small businesses, their owners and those that sell on credit.
Covid-19 general news
More positives today as new analysis by Oxford University show no deaths at multiple major hospitals across London as the number of people in hospital with Covid 19 is at its lowest since March.
AstraZeneca was in focus yesterday after the pharmaceutical giant announced a deal reached with Oxford University to begin delivering Covid-19 vaccine supplies as early as September. The agreement also detailed funding to the tune of $1 billion from the US Biomedical Advanced Research & Development Authority.
Transport Secretary, Grant Shapps, announced that there are plans for “air bridges” to international holiday destinations under consideration.
The Track-and-trace system is due by 1st June according to Health Secretary Matt Hancock at the government briefing.
A covid-19 test that gives results in 20 minutes is being trialed, the health secretary has announced.
Passengers arriving in the UK will be forced to quarantine for two weeks with rule breakers facing fines of £1000
Ramzan Kadyrov, leader of the Russian republic of Chechnya, was reportedly airlifted to a hospital in Moscow, apparently suffering from covid-19.
Oxfam has had to close operations in 18 counties and layoff 1500 staff due to loss of revenue after shuttering its shops and the scandal at its office in Haiti.
Markets.
The FTSE 100 struggled for direction having traded in both positive and negative territory, before ending down 51.9 points (.86%) at 6015 whilst the 250 finished 18 points higher at 16,386.
In Europe the Euro stoxx 50 was down 1.3%. In the US the S&P was down 0.78% and Nasdaq 0.97%.
The latest manufacturing and services PMI data showed an improving situation in both the UK and Europe, however both the Euro and pound were broadly lower. Meanwhile, the latest jobs data in the US showed that a further 2.4 million Americans made jobless claims last week. The latest figure means that approximately 39 million new claims for unemployment insurance have been made since 21st March 21.
UK Government Borrowing reached £62.1 billion in April, the highest monthly figure on record. The £14 billion cost of the furlough schemes had the largest impact.
Oil Prices rose yesterday to their highest since March, supported by lower U.S. crude inventories, OPEC-led supply cuts and recovering demand as governments ease restrictions on people’s movements imposed due to the covid-19 crisis.
Gold Prices corrected, falling away from this week’s 7 year peak as the U.S. dollar strengthened and hopes for a quick economic recovery dented bullion’s safe-haven appeal.
UK economy is on course for a slow rebound
The UK economy is set for a slow rebound from the covid-19 outbreak in the wake of an unprecedented slump in April caused by lock-down measures, according to a preliminary reading of the IHS Markit/Cips purchasing managers’ index (PMI).
The index came in at 28.9 in May compared to 13.8 in April. A score below 50 indicates contraction.
Chris Williamson, the chief business economist at IHS Markit, said: “The UK looks set to see a frustratingly slow recovery, given the likely slower pace of opening up the economy relative to other countries which have seen fewer COVID-19 cases. Virus-related restrictions, widespread job insecurity and weak demand will be exacerbated by growing business uncertainty regarding Brexit.”
IHS Markit also forecast GDP to fall by almost 12% in 2020.
Business activity in Europe recovered slightly in May, after hitting record lows the month before. IHS Markit’s flash purchasing managers’ index, a leading indicator of economic activity, rose to 30.5 from 13.6 in April. Anything less than 50 indicates a contraction. The survey showed that the German economy has been hit less hard and recovered more quickly than its European peers.
Trade body R3 responds to Corporate Insolvency bill
President of insolvency and restructuring at trade body R3, Colin Haig, has responded to publication of the Corporate Insolvency and Governance Bill, stating: “This Bill represents the biggest change to the UK’s insolvency and restructuring framework for almost 20 years. Having called for corporate insolvency reforms since 2016, we welcome the introduction of the Bill to Parliament.”
He went on: “We are also pleased our feedback on the draft proposals has been taken on board by the government. Previously, for example, the moratorium would only have been open to solvent businesses, but now the legislation will enable insolvent businesses to obtain a breathing space to review their options, free from the risk that a creditor may push the company into an insolvency procedure prematurely.”
Factories record biggest drop in output on record
The CBI’s industrial trends gauge shows that UK manufacturing output fell at the fastest pace since the survey began 45 years ago in the three months to May.
The survey, which is based on a poll of more than 800 manufacturers, fell to minus 51 in May from minus 21 in April, as more than 80% of the UK’s factories were hit by the covid-19 lock-down.
More than half of manufacturing firms said they had partially shut down in the three months to May, and nearly three-quarters (74%) reported cash flow problems.
Anna Leach, CBI deputy chief economist, said: “Production levels have fallen even more sharply as firms experience collapsing demand and supply chain disruption, leading some to temporarily shut down their factories.”
Retail
UK Retail Sales fell by a record 18.1% in April as many stores were closed amid the covid-19 lock-down. The fall in April exceeded the 5.2% drop in March, when the government first introduced the covid-19 lock-down measures. Clothing sales fell by 50.2%, according to figures from the Office for National Statistics. Online shopping as a proportion of all retail reached a record high of 30.7%, the ONS added.
Businesses may be asked to contribute to furlough scheme
The government is considering asking companies to pay more national insurance and employer pension contributions to keep staff on the government’s furlough scheme, the Times reports. Companies will be asked to contribute to the costs of the scheme from August but how much they will be asked to pay has not been announced.
Another approach being discussed is requiring employers to contribute 20% of wages, with the government covering 60%.
Treasury faces £6.5bn bill from Bounce Back loan scheme
Around 43% of those borrowing from the Treasury’s Bounce Back loan programme do not intend to repay the cash, according to a survey by the Business Banking Resolution Service (BBRS).
The scheme gives cheap bank loans of up to £50,000 to the country’s smallest businesses with minimal checks.
A spokesman for UK Finance said: “Is important to remember that any financing provided under the government-backed schemes is a debt not a grant and will need to be repaid in full by the borrower over the term of the loan.”
However, the survey raises the prospect that thousands of firms could have to be pursued through the courts for what they owe.
A COVID-19 windfall tax would be a mistake
Ryan Bourne says in the Telegraph that a windfall tax on businesses enjoying high profits during the COVID-19 pandemic, such as supermarkets, streaming services and online delivery companies, would be a bad idea.
Bourne argues that although advocates claim such an additional tax would be a one-off, companies could justifiably lose trust in the government not to expropriate their gains in the future – gains which were the result of innovative action in the face of a crisis.
Furloughed employees say they are being bullied to continue to work
The Telegraph details how some employers are falsely claiming staff are furloughed so they can profit from the taxpayer.
One whistleblowing charity, Protect, says 36% of its coronavirus-related calls involved furlough fraud with the number rising each week.
WhistleblowersUK said the fraud appeared “rife” with its helpline receiving dozens of calls.
Baroness Kramer, co-chair of the all-party parliamentary group for whistleblowing, said: “At a time like this when we as taxpayers are stepping forward to give people a lifeline, this abuse seems even more outrageous than it might under normal circumstances. Taxpayers are feeling the pain.”
Scotland bans COVID-19 support to firms in tax havens
The Scottish parliament has passed emergency legislation to prevent companies based in tax havens from using covid-19 relief funding. Firms or individuals who are registered in tax havens, or are a subsidiary of an offshore company, are now prohibited from receiving support grants.
Patrick Harvie, the Scottish Green party co-leader, said: “Any company which avoids its responsibility to contribute to society should not be getting handouts when things go wrong. That’s why many European nations and Wales have already made this commitment.”
Beware rules on salary sacrifice
Accountants are warning those donating part of their salaries to help their businesses or charities during the covid-19 crisis they could face unexpected tax bills due to salary sacrifice rules.
Agreements about waiving payments, including dividends, will need to be written up in formal documents ahead of time or income tax and National Insurance will still apply.
Tax already paid on any bonuses or wages handed back to the employer cannot be reclaimed.
Nimesh Shah, of Blick Rothenberg, said: “The Government and HM Revenue and Customs have introduced temporary exemptions or changed tax rules for certain situations. It’s bizarre that they haven’t moved to change these unfortunate rules and have chosen only to issue guidance on how charges could be avoided.”
Residential sales down by nearly half
Data from HMRC show house sales in April were down 46% on a year earlier, at 46,440. The figure is below levels seen during the financial crisis.
Hansen Lu, property economist at Capital Economics, said that current transaction levels were “probably close to their floor” and that transactions would remain well below where they were before the virus hit even at the end of the year.
Clarks announces job cuts as funding options explored
Clarks has announced plans to cut a further 900 jobs, as the shoe retailer revealed it is “reviewing funding options with selected advisers” to address short-term liquidity needs resulting from the coronavirus crisis.
The shoe chain said that the job losses include 160 immediate redundancies, including 108 positions at its Somerset head office. Around 700 more jobs will also be lost over the next 18 months.
However, the retailer said this would be partially offset by the planned creation of 200 new roles.
According to the latest Clarks accounts, last year saw losses at the retailer widen to £82.9m from £31m, amid a 6% decline in sales.
It had already said that some of its stores would permanently close as a result of the COVID-19 pandemic, and has furloughed over 5,000 UK staff. Last month it emerged that the retailer’s management is being advised by Deloitte, the family shareholders by KPMG and the syndicate of its lenders by PwC.
Companies raised around £30bn from capital markets amid crisis
A new report shows UK companies raised around £30bn in the corporate bond and equity markets at the height of the coronavirus crisis from the middle of March to early April. More than 90% of large UK companies use the capital markets to raise money, according to the study by BNP Paribas and think-tank New Financial.
This translates into around 1,000 large UK companies using the capital markets and a further 14,000 smaller companies. Around £750bn was raised by UK companies in the bond, equity and leveraged loan markets from 2014 to 2018, or around £150bn a year, according to the study.
Don’t let Covid-19 bust your business!
It will if your cash flow dries up, either sooner or later.
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for sometime to come.
CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. Above all tactfully, because maintenance of goodwill is paramount.
To meet the needs of creditors in the current crisis, we have designed a “critical care” package especially tailored for the situation.
- The annual package costs start at very low rates
- A minimum performance warranty is provided
- Several complimentary services included
Clients instruct CPA on-line via their PC or phone, completely user-friendly. Your late paying customers are told to pay you direct (not to us).
A very recent report shows a 23% increase in the number of unpaid invoices since March 11th THIS YEAR – are you getting a build-up of late payers?
Right now, overdue accounts must be a concern and CPA has a great track record of encouraging slow-payers to pay their suppliers quickly.
It takes less than 17 minutes to see how you would benefit, do you have the time now?
No face-to-face meeting required – just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.
When you see your money come in, you will be so glad you used CPA.
Do you sell on credit?
With pressures on the cash flow it is essential that you stay on top of the credit limits you grant customers and watch carefully for any late payments.
Those customers will look for the easiest option to boost their cash-flow. Don’t let it be you.
You can’t just assume your customers can and will pay you eventually, no matter how big their name is.
It is essential to have credit management systems in place to monitor and check your customers credit worthiness.
It is also best practice to use a trusted third party like CPA to make sure you are paid on time by customers, no matter how good a name they have.
About CPA
The Credit Protection Association can help!
Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.
At the Credit Protection Association, we provide first class credit information that can help you avoid being over extended to customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.
We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.
Companies in trouble usually have very bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.
If you supply on credit, help us help you identify the risks.
Why use a third party collector?
As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When your customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.
Over the years we have collected billions in overdue invoices for our customers.
Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.
You might be hesitant about contacting a debt collection agency. What are they going to be like?
Can they help your particular type of business?
There is no need for concern. CPA are courteous, helpful and very probably have had direct experience of working with your type of business.
Debt collection agencies are not all alike.
Success lies in both recovering money and keeping customers happy. The Credit Protection Association was founded in 1914 and has helped tens of thousands of UK businesses to collect outstanding payments and reduce the risk of incurring bad debt. We believe that creditors deserve to be paid for the work or goods they have supplied but we fully understand the need to maintain
the best possible relationship with customers!
At The Credit Protection Association, we provide solutions, advice and back-up in all areas relating to the supply of services or goods on account. Client-members receive everything they need from a single source to reduce debtor days and write-offs.
The Credit Protection Association has helped has assisted tens of thousands of UK businesses with their credit control requirements, since the First World War.
We are polite, firm and efficient when it comes to recovering outstanding debt.
“We have used CPA for a number of years now. The website is easy to navigate around with lots of helpful reports. The staff are always at hand and very friendly. CPA has helped us reduce our debt over the years and keep track of potential issues with our customers.”
~ CPA client in Buckinghamshire
“The service from CPA has proved to be everything that you said it would be. We have already seen a huge benefit. We have had a number of overdue accounts paid promptly and directly to us. It is also a huge weight off our mind to know that once we have passed an overdue payment over to you, you take care of everything whilst keeping us informed.
~ Credit Controller client in Warrington
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
CPA is passionate about late payment
The Credit Protection Association has been protecting smaller firms against poor payment practices for over 100 years.
We are extremely passionate about breaking the late payment culture that holds back the UK economy and threatens many SMEs with cash flow difficulties being the single biggest killer of Britain’s small businesses.
If you were regularly paid late we can help. Those former customers used you to boost their own cashflow, regularly paying you late.
As a result you had extra costs, you had the distraction of having to chase payment, you had opportunity costs because your capital was tied up in their late invoices.
Under little used legislation, you are entitled to compensation for those late payments.
Now you can boost your own cash-flow.
CPA can help unearth the those hidden treasures.
We have the technology to reveal the compensation you are due and we have the extensive experience and expertise to then turn those claims into cash.
Yes, CPA can help you boost your business cash-flow.
Don’t let your bankers control you, contact CPA today.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Do you realise you could be sitting on a fortune?
Late payments often result in a cash flow crunch and leave SMEs in need of a cash injection.
If you sold B2B on credit then there may be a hidden source of capital you can call on.
If you fancy an bit of extra cash in your business, rather than jumping through hoops with your bank, you could look to uncover the resources from an unexpected source within your own business.
Not many are aware but there could be a hidden fortune within your business, sitting there, just waiting to be uncovered and released.
We can help you uncover the pile of gold, you didn’t even know you were sitting on.
If you trade with other businesses and were often paid late then you could be entitled to significant compensation.
Under little known and under-utilised legislation your business could be due huge amounts in compensation that you didn’t even know about.
Let’s be clear – this is not a way to weaken any customer relationships you value. It is one that identifies who’s been paying late and then recover the potentially significant sums in compensation using Late Payment Legislation from businesses where the relationship has already ended.
You can pick and choose who you want us to follow up – but once we’ve agreed which companies you’d like to pursue compensation from it’s a fast process and there’s no financial outlay to you whatsoever. My team at CPA put its expertise to work to recover the compensation due and fight late payment culture.
That compensation could provide the cash boost your business needed.
But don’t delay, that compensation evaporates if not claimed within six years of the late payment.
How can CPA help?
CPA has developed a unique technology to dig into your accounting records and discover the cash injection you are due by means of compensation. The software does all the hard work. Our software interacts over the cloud with over 300 different software packages, working directly with your accounts package, just so long as it’s stored on a computer.
We recognise that most companies do not have the resources to spend time on the identification and calculation of Late Payment Compensation. Our service can produce an Analyses within just a few days with (usually) less than 30 mins of co-operation from our clients. We work directly with over 300 accounting packages but can also work with bespoke accounts packages. Indeed, speed is essential as the oldest invoices may fall foul of the 6-year time limit.
Once the Sales Ledger Analyses is made available to clients, all that is required is that management decide which commercially sensitive ex-customers to remove from the list and return it to us.
CPA then uses its years of collection experience to explain and recover the Late Payment Compensation Claims. Clients do not handle any part of the recovery process as our team will take all communications from the companies against who the claims has been made. Often, it’s simply a case of explaining the legislation, sometimes we have to go all the way and enforce the legislation through the courts.
The result is that we are realising clients’ claims worth tens and sometimes hundreds of thousands of pounds which, of course, is pure net profit. You may also be among the recipients of “hundreds of thousands of pounds” should you elect to take advantage of our services.
We do the work, you receive the cash.
If you have supplied goods and services to businesses on credit and were regularly paid late then you could be due significant sums in late payment compensation.
We are talking to companies and unearthing claims in the hundreds of thousands from former business customers who paid them late. Large business customers who abused their power to inflict unfair and sometimes illegal payment practices.
We are helping business owners who are looking to boost the returns from their business before they retire. We are helping businesses who have lost major clients after years of loyal service to get properly compensated for systematic late payment. We are helping companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.
Those former clients who regularly paid you late can finally be made to pay.
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections