Covid19 lock-down business news update 15 May 2020 – Half of businesses reveal cash shortage fears!
15 May 2020.
James Salmon, Operations Director.
The Covid19 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
A test to find out whether people have been infected with Covid-19 in the past has been approved by health officials in England. Public Health England said the antibody test, developed by Swiss pharmaceutical company Roche, was a “very positive development”.
A new survey by the Office of National Statistics has estimated that around 148,000 people living in households across England would have tested positive for coronavirus at any given time between 27th April and 10th May. Because this is based on a survey, there will always be some uncertainty in their estimate, but they are 95% confident that the true value is somewhere between 94,000 and 222,000 people.
As part of its plans to reopen the economy in England, the government has put forward its “traffic light” Covid-19 alert system. Similar to the way the public is warned of the threat from terrorism, the scale goes from five (red) to one (green). The idea is that the government will change the level of alert based on the prevalence of covid in the community.
Sixteen health unions have told NHS management that staff must have adequate protective equipment and access to rapid covid-19 testing when they resume previously suspended services. The NHS in England wants hospitals to restart non-urgent operations and outpatient clinics following the lock down. Unions also say ministers should rule out a pay freeze for health workers following reports that the government is considering public sector wages freezes.
As start to ease their lock-downs following the peak of the outbreak, one big challenge is how to resume a semblance of normal life while respecting social distancing rules. In Amsterdam, one restaurant believes it has hit on an innovative way to get diners back while reducing the risk of spreading the virus by housing them in individual greenhouses.
Markets.
European equity markets suffered losses yesterday from the offset as sentiment was knocked by Federal Reserve chairman Jerome Powell’s comments on Wednesday, highlighting the potential lasting damage the coronavirus will cause on the US economy. With plans in place to reopen the global economy, investors also remained wary of a second spike in virus cases. This led to a sell-off in riskier assets, with the FTSE 100 closing the day 2.75% lower at 5,741 points.
Gold and oil price strengthen notably in otherwise rather mixed markets. US stocks reversed initial losses overnight and closed higher with the S&P up 1.15% and the NASDQ up .9%. Asian markets are mixed as a data release showed China’s industrial output bouncing back more than expected in April.
This was despite a rise in US unemployment claims, where data showed an additional 2.98 million Americans filed for unemployment benefits in the week ending 9 May. More than 36 million new claims have been made in the past two months, since widespread lock-downs were imposed to curb the spread of the coronavirus. The negative sentiment surrounding job losses was offset by a rally in banking stocks, such as J P Morgan and Wells Fargo.
Oil prices were higher on the day following an IEA forecast for lower global stockpiles in the second half of the year – although gains were kept in check on concerns of lower demand.
Sterling is weak ahead of the brexit announcements.
Brexit
Covid-19 might have pushed Brexit out of the spotlight but it is still marching towards it December deadline. Both parties are due to provide updates on progress today. Not much seems to have improved however. The EU is threatening to sue the U.K. over the freedom of movement of people, a reminder of how Britain remains tied in to the blocs rules during this transition period. The U.K. government is at the same time doubling down on its negotiating red lines, sticking with the view that the EU should offer a trade deal using precedent from its existing agreements with other countries.
Half of businesses reveal cash shortage fears
Figures from the Office for National Statistics reveal that almost half of UK businesses are concerned that they will run out of cash in less than six months, with a survey of over 5,000 firms finding that a quarter said they were unsure about their level of reserves.
Some 4% reported having no reserves at all, with VAT deferrals, business rates holidays and state-backed loan schemes from the Treasury proving insufficient to prop up every business.
The ONS figures also showed that the nine in ten businessess that have temporarily ceased trading have applied for temporary support under the Government’s coronavirus jobs retention scheme, which is paying the wages of more than seven million workers.
1m self-employed turn to scheme
Data shows that around a million self-employed have asked for Government support in the 48 hours since a wages bailout was rolled out.
Some 440,000 people made claims via a new online portal when it opened on Wednesday, with HMRC seeing more than 500,000 fresh applications on Thursday.
This means that 8.5m Britons are now getting emergency pay from the state, more than a quarter of the UK’s 33m-person workforce.
Commenting on the support scheme for self-employed workers, Chancellor Rishi Sunak said: “Britain’s self-employed workers are a crucial part of our economy and will be key in our recovery – which is why we’re doing everything we can to support them.”
Government’s coronavirus bill hits £123.2bn
Analysis by the Office for Budget Responsibility (OBR) shows that the cost of the Government’s efforts to combat the coronavirus pandemic has risen to £123.2bn.
This is an increase on the previous estimate of £103.7bn, while the OBR’s pre-coronavirus estimate for borrowing stood at £55bn.
Borrowing for this year is calculated to be £298bn, with this up £26bn on a forecast made a month ago, with an extension of the furlough scheme the main contributor to the increase.
Annual borrowing is expected to equal 15.2% of the UK economy. This would be the highest proportion since the 21% recorded at the end of World War Two.
MPs warn against tax rises
The Telegraph reports that Boris Johnson is expected to come under pressure from Conservative MPs who will urge him not to hike taxes to pay for the coronavirus crisis. This comes with the Prime Minister set to take part in a virtual meeting of 250 backbench Conservative MPs in the party’s 1922 committee, with 1922 chairman Sir Graham Brady overseeing a session where questions are put to Mr Johnson.
With a Treasury document leaked this week suggesting the COVID-19 pandemic will cost the Exchequer £300bn this year, several senior Tories have suggested MPs will ask Mr Johnson not to green light tax increases and a pay freeze for public sector workers to cover the cost. It is suggested that the PM will be urged to wait to see whether the economy recovers quickly.
One Tory MP told the Telegraph Mr Johnson might be better to wait until the UK leaves the EU and has more freedom to cut taxes such as VAT in order to stimulate the economy.
Elsewhere, a Sun editorial says Chancellor Rishi Sunak must avoid tax hikes that could push the economy “into a death spiral”, arguing that tax cuts will “turbo-charge post-lockdown growth and give us a better chance of a speedy V-shaped recovery”.
Tax changes could jump-start the economy
Hugo Dixon in the Independent argues that while “it would be a mistake to hike taxes now as that would stifle the economy”, in the longer term “most of the effort to cut the deficit should come from taxes.”
He argues that a fall in oil prices driven by the coronavirus crisis offers a good opportunity to push up fuel duty and calls for an increase in taxes on carbon emissions by industry and energy producers. Mr Dixon also proposes a higher digital tax, saying the 2% rate of digital services tax on UK revenues of large internet groups could be nudged up.
Lloyd’s of London: Insurance claims to be biggest since 9/11
Insurance market Lloyd’s of London has said it expects coronavirus-related claims to cost it £2.5bn to £3.5bn, which would be the biggest payout since the September 11 attacks in the US in 2001.
Lloyd’s chief executive John Neal said it could be two years “before everyone really gets their arms around the true cost of this pandemic”. He added: “We estimate that government borrowing could be as much as $10trn globally to protect the economy for the losses that we’ve seen”. Lloyds said the estimated 2020 underwriting losses covered by the industry as a result of COVID-19 are approximately $107bn, adding that the industry will also experience falls in investment portfolios of an estimated $96bn.
Digital tax
France’s finance minister has said it will push ahead with its tax on internet giants this year. In January France offered to suspend its tax on big digital companies’ income in until the end of the year while an international agreement on cross-border taxation was negotiated this year.
BT & Openreach
BT Group is in talks to sell a £20 billion stake in its fibre rollout division Openreach, according to reports. BT has come under regulatory pressure to sell off Openreach, which runs the UK’s broadband network and is a legally separate entity to BT, in recent years.
Update – we have just seen a news report that BT have denied holding ongoing talks to sell a stake in openreach.
RICS calls for stamp duty holiday
Surveyors have urged the government to give home buyers a stamp duty holiday amid fears that UK house prices could crash by as much as 13% as confidence dries up due to the coronavirus pandemic. The Royal Institution of Chartered Surveyors reiterated its calls to scrap the tax on property purchases for anyone who is downsizing their home.
Mortgage rates at record lows
Finance experts at Moneyfacts have reported that the average two-year fixed mortgage rate is now at a record low of 2.09%, with the Bank of England reducing base rate to a record low of 0.1%.
Eleanor Williams of Moneyfacts stated: “Looking at products often favoured by first-time buyers, at 90% loan-to-value, the number of products available has dropped by 270 and 243 for two and five-year fixed rate options respectively. First-time buyers are therefore likely to feel the effect of the current circumstances even more keenly than most.”
Health experts question England’s rapidly assembled tracing army
The FT looks at efforts to test for and trace COVID-19 cases, noting one initiative has seen drive-in test centres run by Deloitte.
City firms begin to move back in
Financial services firms and banks in the City of London are working on ways to return staff to offices as coronavirus lockdown restrictions are eased.
Tim Jones, chief operating officer at KPMG UK, commented: “As part of our preparation, we’re applying lessons learned from other firms in our global network. These include looking at how we’ll implement social distancing in our offices, guidance for colleagues working at client sites, phased returns and staggering our travel times.”
Meanwhile Kevin Ellis, PwC UK chair and senior partner, noted: “It goes without saying we’re planning for how we might gradually increase numbers of people in our offices for when restrictions are lifted. This includes rethinking what collaborative working looks like in a workplace where social distancing rules apply.”
Meanwhile, ICAEW CEO Michael Izza says implementing guidance on returning to offices “will mean costs and changes which businesses will not find easy,” saying: “This is not a return to business as usual.”
City traders handed illegal tax break, ECJ rules
The British government has been ordered to pay the European commission’s legal costs after being successfully sued over tax breaks for City traders. The European Court of Justice (ECJ) ruled that the UK breached an EU directive by failing to notify Brussels of a zero rate of VAT given to commodities traders, a move it said unfairly boosted the City of London at the expense of other EU financial centres. A Treasury spokesman said the ECJ decision does not require businesses to pay back VAT on historic trades.
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