Late payments resulting from Covid-19 – business news 4 September 2020.
James Salmon, Operations Director.
The ONS reports on late payments resulting from Covid-19, the latest PMI and retail numbers, business investment, covid-19, market and other business news.
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.
Late payments, work and Covid
An Office for National Statistics (ONS)survey has found businesses are continuing to struggle with over half (54%) of businesses said they were waiting on late payment of invoices as a result of COVID-19.
Some 47% have seen revenues decline, with 9% of businesses saying income was at least 50% below where it was last year.
And 11% of the workforce remain on furlough, the ONS estimated, down from 13% a week prior.
1 in 5 people (20%) in Britain are still working from home full-time, according to the data. However this is down from the high of 38% in mid June.
Some 57% of employees are now commuting to their place of work as Boris Johnson pushes for more people to get back to the office to help save city centre economies and prevent a collapse in the commercial property market.
The ONS survey results match a separate survey by Morgan Stanley that found 56% of Brits have now returned to their normal place of work. However, Morgan Stanley found just 34% of desk-bound office workers had returned to normal working habits.
“Over the last two months, the proportion working exclusively from home has followed a steadily decreasing trend,” the ONS said. “In the most recent week, the proportion of working adults who travelled to work reached 57%, its highest level since the series began, after increasing steadily over the last two months.”
Business activity spikes
The IHS Markit/CIPS Composite Purchasing Managers’ Index (PMI), a monthly gauge of activity in the services and manufacturing sector, points to rapid growth in August, with the index hitting a six-year high of 59.1 from 57.0 in July.
The survey’s index of employment revealed the first decline in three months, with concerns that further job losses are on the horizon as the Government’s furlough scheme comes to an end on October 31.
Chris Williamson, chief business economist at IHS Markit, said companies’ ability to cope with the withdrawal of economic support measures is the “burning question”, adding: “Policymakers face a huge challenge in sustaining this recovery and avoiding a ‘bounce and fade’ scenario.”
The IHS Markit/CIPS UK Services PMI Business Activity Index registered 58.8 in August, up from 56.5 in July. This marks an ongoing increase, with readings of 47.1 in June, 29.0 in May and a record low of just 13.4 in April. August’s figure signaled the fastest pace of output growth since April 2015.
Howard Archer, chief economist at the EY Item Club, said the improvement in services activity “was linked to the re-opening of companies’ own sites and their client sites.”
Retail sales climb in August
Retail sales climbed in August, hitting the highest level since the outbreak of the coronavirus pandemic.
In-store like-for-like sales were down 28.1% year-on-year in August, marking the best result since February, while non-store sales jumped 72% from a base of 18.6% as the shift toward online shopping driven by the pandemic continued.
Sophie Michael, head of retail and wholesale at BDO, commented: “As we enter the largest recession on record, the outlook remains unsettled with constrained family finances and job market uncertainty continuing to impact negatively on discretionary spend.”
UK businesses slash investment as coronavirus crisis bites
A Bank of England survey of CFOs shows that average investment by UK firms will be down 32% in Q3 compared to if there had been no coronavirus pandemic.
Tax and the cost of COVID-19
Ian Martin in the Times looks at the likelihood of taxes rising to cover the cost of the COVID-19 outbreak, with Chancellor Rishi Sunak reportedly mulling increases. He argues that senior Treasury officials, “veterans of the 2008 financial crisis”, know it would be “madness” to introduce large tax rises soon as this “would squash the recovery”. He adds that once a recovery is established, spending should be controlled and some taxes could rise to top up the public coffers.
Elsewhere, the FT’s Chris Giles argues that economic recovery from the coronavirus pandemic would be hampered by the tax increases being considered by Mr Sunak.
Meanwhile, Ben Chu in the Independent highlights that income tax, national insurance, or VAT are not among the levies reports suggest could increase, despite these accounting for close to 60% of the exchequer’s tax take, with the Conservatives having pledged not to increase these taxes in the run up to the last election.
Firms passing tech tax onto customers
Hannah Boland and Michael Cogley in the Telegraph reflect on news that Google, Amazon and Apple are set to pass the cost of the digital services tax onto consumers and advertisers, saying that while the levy was designed to pull in more revenue from global tech firms, “it appears the burden will fall elsewhere”.
They note that the Treasury will collect as much as £500m a year from the tax which applies to social media firms, search engines and online marketplaces, but instead of large tech companies paying up, it will be small businesses who sell via Amazon’s marketplace, advertisers who pay to have their ads appear on Google, and app developers who use Apple’s App Store.
Richard Murphy of Tax Research UK says the levy is “essentially a sales tax levied on top of VAT”, adding that such taxes are “passed straight on to the consumer”. Chris Sanger at EY likens the digital services tax to air passenger duty, saying it “will be included as an extra cost for the buyer or seller”. Writing in the same paper, Barney Durrant of marketing consultancy Bluebell Digital voices concern that the financial hit of the tech tax is being passed on to customers.
First home price rises outpace wider average
Analysis by Halifax shows that the price of the average first home has increased by more than two-thirds in the last decade, jumping 69% from £142,473 in 2010 to £241,025 today. In the same period, the average house price has only risen 33%. The report also shows that the number of first-time buyers has fallen by 29% this year, with 116,843 first-time buyers in the first six months of 2020 compared to 164,800 in the same period in 2019.
Covid-19 general news
Global cases surpass 26 million and deaths exceed 865,000
Plastic visors and masks with valves could increase coronavirus transmission rates, according to new research. The study by scientists at Florida Atlantic University has visualised how aerosol droplets spread around visors and pass through mask valves, showing these coverings don’t perform as well as cloth ones and medical masks. The researchers warn that widespread public use of alternatives to medical and cloth masks “could potentially have an adverse effect” on attempts to constrain the pandemic. However, after top scientists said face visors were “unlikely” to offer any protection against coronavirus, the government reviewed its guidance saying that people working in beauty salons should wear a face visor as well as a medical mask.
Russia’s proposed Covid-19 vaccine induced an antibody response in all participants in early trials and found no serious adverse effects, according to the first peer review of the controversial vaccine project.
France’s prime minister, Jean Castex, announced a coronavirus recovery plan worth €100bn equivalent to 4% of GDP.
Spain’s government, will extend its furlough scheme indefinitely to protect workers from the economic impact of the pandemic.
Markets.
The FTSE 100 rose by 1% yesterday morning but as the US market opened negatively, the market turned and it ended down 1.5%. Overnight, in the US stocks tumbled as investors rotated away from the big tech stocks, the DOW dropped -2.78%, the S&P 500 dropped -3.51% and the NASDAQ dropped -4.96% in a steep correction .In Asia, Nikkei is down -1.20%. Hong Kong HSI is down -1.65%. China Shanghai SSE is down -1.36%. Singapore Strait Times is down. Oil and Gold fell as the dollar strengthened. The pound weakened against the Dollar (1.325) and Euro (1.1195)
Traders are closely monitoring today’s non-farm payrolls report, one of just two monthly labor market scorecards left on the calendar before the Nov. 3 presidential election
Costa Coffee is to cut 1,650 jobs in response to Covid-19. Owner Coca-Cola said the business needed to reflect lower levels of business.
Senior Downing Street figures are putting the chances of a Brexit trade agreement with the European Union deal at 30-40%, according to The Times.
Pharmacy funding fears
A report from EY shows that community pharmacies are underfunded by £497m a year, with analysis suggesting that 72% of the family businesses will be losing money within four years unless there is increased funding from NHS England.
Pension freedoms age rising
The Government has confirmed that the pension freedoms age is set to rise from 55 to 57, with the increase in the age that people can access personal pensions coming into effect in 2028.
The change to defined contribution pensions was confirmed in a written ministerial statement by economic secretary to the Treasury John Glen. Steven Cameron, pensions director at Aegon, said that the Government indicated that the shift was on the cards in 2014, but didn’t include provisions in legislation, leading to uncertainty over whether the change was actually occurring.
Pointing to “government communication gaps” which meant many women found out too late that their state pension age was increasing from 60 to 65, he said it is “imperative” that ministers and the industry make sure the change in pension freedoms age is clear to all those saving in pensions.
Redwood: Tax cuts, not increases the answer
With ongoing speculation that the Chancellor will look to increases taxes in a bid to cover the hit to public finances brought about by the coronavirus crisis, Sir John Redwood, chairman of the 1922 Committee’s Treasury group, has suggested that “tax cuts, not increases” are the answer. Writing in the Telegraph, Sir John points to the way the housing market has bounced back with support from a temporary cut to stamp duty, saying: “The Government has just shown how a tax cut can provide a good boost to activity, jobs and incomes.” He added that the Inland Revenue “will probably be a winner too”, with it taxing extra activity among estate agents, conveyancers, mortgage businesses, removal firms and tradespeople. He adds that HMRC will also see a “stamp duty boost from more transactions as an offset to the lower rates.” Sir John adds that the Chancellor should look to “tax reductions and assistance”, saying the economy needs “tax cuts that reinforce recovery and speed the opening up of every type of work.”
Raising the wrong taxes can hinder growth – Brady
Sir Graham Brady, chairman of the 1922 Committee representing Conservative MPs, has urged caution over increasing taxes. Appearing on BBC Radio 4’s Today programme, Sir Graham was asked if tax increases were needed to balance the books in the wake of the COVID-19 outbreak. He replied: “Well, I think the necessity is to make sure that we don’t make this crisis any worse than it has to be, and fundamental to that is making sure that the country gets back to work so people resume as far as possible normal life.” Asked what role taxation would have, he offered: “I think we have to be aware that raising taxes, and raising the wrong types of taxes especially, can be a way in which you stifle economic growth and prospects, rather than guaranteeing them.”
Backbenchers concerned over tax plan
The Telegraph reports that Conservative backbench MPs could vote against parts of this autumn’s Budget if Rishi Sunak rolls out tax rises. This comes after the Chancellor told a meeting on Wednesday that tax rises were on the cards, stressing the importance of being honest with the public about how the cost of the coronavirus response will be covered. The paper cites a former minister who says they won’t be voting for the Budget, adding that MPs are “going absolutely insane in the backbench WhatsApp group.” Another MP tells the Telegraph that they have heard talk of backbenchers protesting against the Budget but suggested this could be avoided if Mr Sunak took their concerns on board.
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