Debt plan for Covid loans and public sector pay rise – business news 21 July 2020.
21 July 2020.
James Salmon, Operations Director.
We look at a proposed debt plan for Covid loans, the hit to household incomes and reduced household spending. House prices hit record high, a public sector payrise and lots more!
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.
Debt plan for COVID-19 loans
The latest research from Red Flag Alert looks at concerns that a “dangerous level of unsustainable government-backed business debt” could see more than 800,000 firms fail if payments cannot be deferred when they are due next year, considering a proposal for a student loan-style scheme put forward by TheCityUK.
He says the plan, which would see coronavirus support loans converted into a tax debt, would mean debt will only be paid back when and if a business reaches a certain level of sales.
He says such a scheme would position HMRC to collect more detailed and current data, “which could drive more robust fiscal management, promote more responsible borrowing and ensure financial obligations are met more consistently
BoE economist sees V-shaped recovery
Andy Haldane, the Bank of England’s chief economist, says the UK economy has seen a V-shaped “bounceback” following the coronavirus crisis.
He told MPs on the Treasury Select Committee: “Roughly half of the roughly 25% fall in activity during March and April has been clawed back over the period since,” adding that the economy had grown by about 1% per week since hitting its floor in mid-April.
Mr Haldane noted, however, that while there is evidence of a V-shaped bounceback so far, “that of course doesn’t tell us about where we might go next.” He also told MPs that unemployment was rising and probably stands at about 6%, compared with the 3.9% recorded in the most recent official figures.
Pandemic hits incomes
The Resolution Foundation says working-age households have suffered the worst income shock since mid-1970s, with the coronavirus crisis delivering a 4.5% decline in typical household incomes in May.
The decline is the steepest since the 5.1% recorded in 1974 and exceeds the 2.7% fall in incomes seen in the wake of 2008’s financial crash.
The think-tank’s Living Standards Audit says Government support has softened the impact for many people, calculating that without Government intervention the incomes of the poorest fifth of households could have fallen by as much as 8%. Adam Corlett, the Resolution Foundation’s senior economist, said: “This initial phase of the crisis has shown the importance of bold job support and a stronger social security safety net.”
Households continue to rein in spending
IHS Markit’s household finance index increased to 41.5 this month from 40.7 in June, while the forward-looking index declined to 42.5 in July from 45.9 a month earlier.
Tim Moore, director at IHS Markit, remarked: “UK households continue to tighten the purse strings despite a phased reopening of the economy,” warning that “extremely cautious spending patterns” reflect “widespread anxiety about jobs and the outlook for earnings”.
Economists have noted that the sharp reduction in household spending in July could boost the economy if it is released as lockdown eases, but cautioned that there is potential for it to be held back if people continue to spend less.
Mini boom pushes house prices to record high
A housing market “mini boom”, fuelled by this month’s stamp duty cut, has pushed the average price tag on a property to a new record high, according to Rightmove.
Its latest figures show that the average price of a property coming on to the market in Britain reached £320,265 this month – the highest figure since the site started its report in 2001.
This was up 2.4%, or more than £7,000, on the previous record of £312,625 reported in March, just before the housing market was put on hold by the coronavirus pandemic. Overall, enquiries were up 75% year-on-year in Britain, and Rightmove added that it expected the activity to increase even further, as Scotland’s market had not yet been open for a full month, and Wales still had some restrictions in place.
Job vacancies down 60%
Analysis by jobs site CV-Library shows that employment opportunities in the UK fell by 62% in the three months to June compared to Q2 2019, with the figure as high as 80% in some regions. Sectors which saw the biggest fall in advertised vacancies include administration, design, sales, recruitment, catering, media, and marketing.
Government debt
The cost of the covid response was laid out as UK Government Borrowing hit an all-time record £128bn between April and June 2020, official statistics showed. That was a massive £103.9bn rise compared to the same period in 2019, and more than double the £55.4bn total borrowed in the previous financial year.
Public sector payrise
Almost 900,000 Public Sector Workers are to get an above-inflation pay rise, including doctors, teachers and police officers. Chancellor Rishi Sunak said he recognised their “vital contribution” during the coronavirus pandemic. The Treasury said the money for the salary increases of up to 3.1% would come from existing departmental budgets.
Retail
UK Retail Footfall growth slowed last week following the initial rush to high streets when pubs and restaurants reopened. Footfall across all UK retail destinations rose by 4.5% last week from the week before, less than half of the 10.6% jump recorded the previous week.
Covid-19 general news
Global cases hit 14.7 million with deaths over 609,000.
AstraZeneca reported encouraging interim results that it described as “robust” from a trial of its potential Covid-19 vaccine, being developed alongside Oxford University. The much-anticipated findings from a trial of 1077 subjects showed that a single dose of AZD1222 resulted in a four-fold increase in antibodies fighting SARS-CoV-2 for 95% of participants, the virus strain which causes Covid-19. The British government has already ordered 100m doses of the vaccine. The Lancet also published a report about a promising candidate vaccine from China, which like the Oxford vaccine appears both safe and effective at stimulating an immune response.
As US case spike slows, Trump makes a case for mask wearing and resumes the daily virus briefings.
NICs plan to add £200 to self-employed workers’ tax bills
Analysis by the independent House of Commons Library shows that the average self-employed worker faces an extra £200 on top of their tax bill due to the Chancellor’s plan to increase their National Insurance contributions. Rishi Sunak has signalled that Class 4 NICs that the self-employed pay will be brought in line with employees, suggesting this would be price for “parity of support” with the furlough scheme for employees. Liberal Democrat leadership contender Layla Moran has questioned the plan, describing it as a “tax on entrepreneurship”.
Markets.
European markets were mixed today as EU leaders continued to thrash out details on a coronavirus economic rescue plan. Italian PM Giuseppe Conte said late in the afternoon that progress had been made on the fourth day of discussions, and that he was “cautiously optimistic” a deal would be reached. Leading indices in France and Germany closed higher, while shares in London started the week on a softer footing and closed lower. In the US, the Nasdaq hit another high after climbing 2.5%. The pound buys you 1.269 USD and 1.11 Euros.
Cruise ship firm ceases trading
Cruise firm Cruise & Maritime Voyages is to shut down, administrators at Duff & Phelps have confirmed. The company had been looking to secure additional finance, having been hit by the coronavirus crisis, and was in discussions with investor VGO Capital Management. However, Duff & Phelps said the firm was unable to conclude the funding within the timescales required. CMV has ceased trading and international sales offices in Australia, France, the United States and TransOcean Tours in Germany have been closed. Administrators said the action was “likely to result in the redundancy of the UK employees and an uncertain future for those employees in the wider group.”
Gym chain set to appoint administrators
Low-cost gym chain Xercise4Less has filed a notice of intent to appoint administrators. The chain, which has about 50 sites, was put up for sale in May by investors and shareholders including the Business Growth Fund and Proventus Capital Partners. The firm, which is working with advisors at PwC, is looking to protect itself from creditors while it finalises a deal to overhaul the structure of the business.
Luggage firm bags rescue deal
Luggage firm Antler has been sold out of administration to ATR, the holding company of South African tycoon Michael Lewis. Antler went into administration in May, having taken a hit when the travel and retail sections all but shut down due to lockdown restrictions. Will Wright of KPMG comments: “We are delighted to have concluded this deal, which safeguards the future of this storied and iconic brand. ATR is in a strong position to be able to take the Antler business forward.”
PAC calls for pension tax relief review
The Public Accounts Committee (PAC) has called for a wide-scale review of pension tax reliefs, suggesting that the Government does not have enough information on whether the scheme is effective. While ministers say that the policy, which cost the Treasury £38bn in 2018/19, provides an incentive to save long-term, the PAC said: “The Government has not made any assessment of whether that huge cost actually encourages saving for retirement or reduces dependence on state retirement benefits, or whether it just enables those already saving comfortably to save more.” The report also flags concern that certain workers were not benefiting from pension relief, saying around 1.75m low-paid and part-time workers earning less than the personal allowance “will not be getting tax relief on their pension contributions after being auto-enrolled into employer pensions”. Victoria Todd, head of the Low Income Tax Reform Group, welcomed the PAC’s report, saying: “Its recommendation of publishing more data is helpful in terms of making the issue more transparent.”
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