Late payments in focus – business news 30 October 2020.
James Salmon, Operations Director.
Late payments in focus – New research on late payments to SMEs, the government turns up the heat on late payers and reports of late payments in the roofing business plus covid-19, market and lots more financial and 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.
New research on late payments to SMEs
On average, sole traders and small businesses expect to receive the payment that they are due 15 days after completing work, new research has revealed.
Tide commissioned YouGov to survey small business decision makers, including sole traders, to discover their payment terms, how often they experience late payments, and the actual duration before invoices were settled.
Tide calculated that the average payment term was 15* days. However, approximately 1 in every 6 (16%*) invoices are paid late. Tide calculated that when late payment occurred, this added, on average, another 15* days, bringing the total up to 30* days.
89% of those surveyed have some form of payment terms in place, and the remaining 11% do not have one of the payment terms shown to respondents or are not sure. Nearly one third (30%) have payment terms of 30 days after completion, and more than a third (36%) are waiting 30+ days after completion. 17% are securing at least some payment ahead of beginning work. A lucky third (33%) never experience late payments.
When it comes to industries, retail is the top performer with just 11% of invoices paid late. IT & telecoms and construction professions experience more than 20% late payments – or 1 in 5. At the most extreme, small businesses operating in the IT & telecoms sector have average payment terms of 36* days, with payments arriving, on average, 12* days late.
Sarah Young, VP of Member Engagement at Tide, added: “Late payments are a blight on businesses, and the problem often becomes a cascade of extended credit. Perhaps the biggest takeaway from this research is that giving generous credit terms does not improve your credit control. In fact, it mostly has an inverse relationship; the longer your credit period, the bigger the payment delays, and the longer you wait to get paid.
CPA is helping SMEs tackle late payments. We are also helping SMEs turn late payments into compensation – see the links at the bottom of this page.
Government turns up heat on late payers
The Cabinet Office is strengthening their prompt payment requirements for contractors bidding for government contracts.
A year ago new rules were introduced requiring all government agencies to check their main contractors’ payment records to suppliers for projects worth over £5m during the bidding process.
Under the procurement rules, main contractors need to demonstrate that 75% or more of invoices are paid within 60 days in at least one of the two previous six month reporting periods.
That rule was a watering down of the original plan to require contractors to pay 95% of invoices within 60 days as the government was worried now one would qualify.
However, the Cabinet Office is now going to raise the threshold, requiring bidding contractors to pay 85% of invoices in 60 days, taking effect from April 2021.
Firms will also be expected to demonstrate anaction plan is in place to reach the 95% standard in the future.
On average, main contractors now pay 92% of their invoices within 60 days and 75% within terms but there are many that would fail the increased threshold.
CPA is helping fight the late payment culture by hitting bad payers with compensation claims retrospectively – To find out how we can get you compensation see the links at the bottom of this page.
Late payments hit the roof
According to a survey from roofing trade body NFRC while 90% of members reported being either ‘busy’ or ‘very busy’ , back to pre-covid levels, 23% report concerns on late payment including one member who had to wait 4 months to be paid by one public sector client.
NFRC Chief Executive, James Talman said: “This survey confirms what we have all been hearing—roofing contractors are generally busier than ever. A combination of pent-up demand in the summer, combined with government stimulation packages, and people working from home wanting home-upgrades, has meant demand has not been a problem for roofers.”
“However, it is shocking that so many roofers are still waiting to be paid, with some reporting waiting on thousands of pounds from their clients. We all know that times are tough for some firms, but that is no reason not to pay your supply chain. I was particularly concerned to see public sector clients listed as being the worst culprits when they should be leading the way.”
CPA is helping SMEs tackle late payments. We are also helping SMEs turn late payments into compensation – see the links at the bottom of this page.
IMF downgrades forecast for UK economy
The International Monetary Fund (IMF) has downgraded its forecast for the UK economy and predicted it will shrink by 10.4% in 2020.
This marks a decline on the 9.8% hit to GDP that the IMF forecast two weeks ago.
It said that the UK’s economic recovery is likely to be weaker than expected because of the second wave of coronavirus hitting Europe and ongoing Brexit uncertainty.
The IMF warned that the coronavirus crisis could leave a legacy of “persistently higher unemployment”, and while IMF managing director Kristalina Georgieva praised the Government for spending heavily to support jobs, incomes and businesses, she urged Chancellor Rishi Sunak to roll out further spending to ease the impact of the pandemic, saying continuing government support is “essential ” for the economy.
The IMF’s longer -term forecast suggests the UK economy will see growth of 5.7% in 2021.
ICO takes action against credit reference agencies
The Information Commissioner’s Office (ICO) has ordered the credit reference agency Experian Limited to make fundamental changes to how it handles people’s personal data within its direct marketing services.
The enforcement notice follows a two-year investigation by the ICO into how Experian, Equifax and TransUnion used personal data within their data broking businesses for direct marketing purposes. A complaint from the campaign group Privacy International to the ICO also raised concerns about the data broking industry, specifically Equifax and Experian.
As a result of the ICO’s work, all three credit reference agencies (CRAs) made improvements to their direct marketing services business. Equifax and TransUnion made the improvements alongside withdrawing some products and services. The ICO is therefore taking no further action against them.
The investigation found how the three CRAs were trading, enriching and enhancing people’s personal data without their knowledge. This processing resulted in products which were used by commercial organisations, political parties or charities to find new customers, identify the people most likely to be able to afford goods and services, and build profiles about people.
The ICO found that significant ‘invisible’ processing took place, likely affecting millions of adults in the UK. It is ‘invisible’ because the individual is not aware that the organisation is collecting and using their personal data. This is against data protection law.
1,700 firms planned redundancies in September
Data released to the BBC following a Freedom of Information request shows that British employers planned making redundancies at near record levels in September, with 1,734 employers notifying the Government of plans to cut 20 or more posts.
This is near to highs seen in June and July. The analysis shows that 82,000 positions were identified as being at risk by companies in September – three times the level seen in the same month last year. Tony Wilson, director of the Institute for Employment Studies, said: “What we may be seeing is firms who were intending to bring people back deciding that they can no longer do it because of the worsening economic climate. ”
Small business confidence slips in Q3
Analysis by the Federation of Small Businesses (FSB) in Scotland shows that a quarter of business-owners believe that conditions will severely deteriorate over the next three months. The FSB’s small business confidence index for Scotland fell to -26.3 points in Q3, down from -10.5 points earlier in the year. The UK-wide index fell to -32.6 points, down 28 points on the previous quarter. A poll found that 24% of SME leaders north of the Border expect conditions to worsen over Q4, a fifth believe they’ll get slightly worse, while 11% expect a big improvement. More than half of the Scottish businesses surveyed reported a drop in revenue growth in Q3. Across the UK, one in four small firms reduced headcounts over the past quarter, while nearly a third expect to trim their workforce in the next three months.
Ministers urged to publish TfL report
The Telegraph’s Oliver Gill looks at plans that would see extending the London congestion charge zone set as a condition of a bailout of the capital’s transport authority, Transport for London (TfL). He notes that Transport Secretary Grant Shapps is under pressure to publish the Government’s independent review of TfL’s finances, with KPMG having been hired to review measures that could be imposed on the transport authority in return for financial support.
Covid-19 general news
With 23,065 new cases in the UK and 536,687 global cases pass 45 million and global deaths reach 1,182,908
German Chancellor Angela Merkel has told European leaders that they should have acted earlier to control Covid-19 as countries put lock-downs back in place and the economic costs mount.
The U.K.’s drug regulator is said to have started accelerated reviews of Covid-19 vaccines under development from Pfizer Inc. and AstraZeneca Plc, with Europe grappling to control a renewed surge in the disease
The death rate for Covid-19 is higher in high-income countries, which tend to have older populations, an Imperial College London research team found in a study.
Markets.
Global equity markets stabilised yesterday as fears regarding the extended lock-down measures in Europe were confirmed, although this news seems to have been priced into the Wednesday’s steep declines. The FTSE 100 bounced between positive and negative territory to eventually close broadly flat while the 250 fell 0.4% In Europe there were also minor falls.
Overnight the DOW rose 0.52%, the S&P 500 rose 1.19% and the NASDAQ rose 1.64%.
The oil price fell over 3% to $37.9 as traders continued to be concerned about demand if lock downs continue. Gold also fell to $1866 as investors turned to cash in US dollars.
Forex markets are staying in relatively tight range on mixed market sentiments. Asian indices turn lower despite a weak recovery in US markets overnight.
At the latest ECB press conference, Christine Lagarde hinted at further support in December as the eurozone economy grapples with a second wave of covid-19 cases, whilst holding interest rates steady at record lows.
The US Economy grew at a record pace in the third quarter of the year after the devastation of the spring, according to figures that will no doubt please President Donald Trump ahead of the election. US GDP grew at a quarterly rate of 7.4 per cent (annualised 33.1%) , the Bureau of Economic Analysis said, following a nine per cent collapse in the second quarter. The number of new jobless claims last week was also smaller than expected. However, the American economy is still smaller than it was before the covid-19 pandemic struck.
Big Tech
Big Tech in America’s biggest tech reported on Q3 yesterday and the results showed how they were benefiting from the lock down and the digitisation of the economy. Amazon’s third-quarter sales grew 37% year-on-year, to more than $96bn and it hired 50% more staff to cope with the demands of locked-down households. Alphabet (Googles parent) was the only giant whose share price strengthened, as Google’s ad sales recovered, especially on YouTube. Apple’s iPhone sales were even weaker than expected, but overall revenue and profit held steady. Facebook reported quarterly revenue growth of 22%, with a prediction of better to come over the holidays, despite current government scrutiny.
China
China released details of the country’s new five-year economic plan, devised behind closed doors by the Communist Party’s Central Committee. The plan’s emphasis is on becoming self-sufficient in “core technologies” and promoting China’s domestic market. There was also a pledge to open up to more foreign investment.
Offices will ‘remain a key part of working life’
PwC UK chairman Kevin Ellis says the office will “remain a key part of working life”, despite the coronavirus crisis driving a shift toward working remotely. Noting that PwC is not planning to downsize its office space, Mr Ellis said: “The future of the market for office space is difficult to predict, if anything at the moment we need more space than ever because of social distancing.” He added that feedback from staff suggests “many really value having the option to use an office, whether for a personal or business need.” Mr Ellis added: “Hybrid working is here to stay, and therefore the office will remain a key part of working life.” The Times notes that Deloitte recently announced plans to close offices in Gatwick, Liverpool, Nottingham and Southampton as it moves toward increased home working.
Firms urged to explore JSS details
The Press and Journal looks at the Job Support Scheme (JSS), which is set to replace the Job Retention Scheme and will see the government pay 61.67% of the wages of every employee for hours not worked up to a monthly cap of £1,541.75. Katy Christiansen, payroll director at Anderson Anderson & Brown, advises firms to familiarise themselves with the different rules under the JSS “and how they tie in with the restrictions and corresponding tier in which they are operating”.
North unfairly hit by rates system
A report from economic think-tank Centre for Cities suggests that the business rates system “penalises companies in poorer areas of the north of England”, with businesses in the north overpaying the tax while businesses in southern England underpay. This, it argues, undermines attempts to “level up” regional economies. The report calls for more frequent revaluations in an effort to better reflect local economic realities. It also calls for revaluations to be devolved to local government instead of the centralised Valuation Office Agency. The Centre for Cities report also found that taxes paid by bricks-and-mortar stores effectively subsidise online retailers, with the rates system having been slow to adapt.
House prices
UK House Price growth jumped to the highest rate in five years this month, as the market continued to experience a post-lockdown bounce. Annual UK house price growth rose to 5.8 per cent in October, the highest level since January 2015.
Mortgage approvals up in September
Bank of England data show that approvals of mortgages for house purchase increased to 91,500 last month from 85,500 a month earlier, with pent-up demand and the stamp duty holiday said to have driven the housing market boom. September’s total marks the highest level since 2007. Net mortgage borrowing in September was at £4.8bn, an increase from August’s figure of £3bn. Andrew Montlake, managing director of mortgage broker Coreco, warned that a surge in activity may soon draw to an end, saying: “The post-lockdown bull run is already over … Lenders have been pulling down the shutters due to ongoing struggles with capacity and concerns over rising unemployment levels, specifically the impact on house price growth.”
Natwest
NatWest Group, formally known as Royal Bank of Scotland, swung to a third-quarter profit after its impairment losses fell sharply from the second quarter and it incurred far less costs due to misconduct. NatWest, like rivals HSBC, Barclays and Lloyds, also forecast annual credit losses at the lower end of its previous guidance range.
HMRC in scam warning
With tomorrow marking the deadline for paper self-assessment tax returns being submitted and the January 31 cut-off for online submissions fast approaching, HMRC has issued a number of warnings, reminding taxpayers to be wary of phishing emails and fake websites. The Revenue also urged people to stay alert over calls, emails or texts claiming to be from HMRC and offering a tax refund or warning them they owe tax. Meanwhile, HMRC’s interim director general of customer services, Karl Khan, says HMRC is “determined to help customers during this difficult time”, saying: “We know many customers will have been adversely affected by the coronavirus pandemic, or will need help to spread the cost of their tax bill.”
Council on brink of bankruptcy
A Government taskforce has been sent to oversee Croydon Council in London after a report by Grant Thornton found that the local authority is on the verge of bankruptcy. The auditors revealed a £60m black hole in Croydon’s budget, and just £10m of financial reserves. Grant Thornton said COVID-19 has “ruthlessly exposed” the council’s fragile underlying financial position.
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.
You put up with the PAIN – now claim the GAIN!
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.
Did you know that your business is entitled to a minimum of £40 for every commercial invoice paid late to you over the past 6 years?
How many of your invoices are paid late each month – 20, 50, 100 or more?
At £40 per invoice that’s claim of £57,600, £144,000, £288,000 plus interest. The more invoices the bigger the claim!
At £100 per invoice it’s £144,000, £360,000, £720,000 plus interest.
For over 20 years, CPA has calculated and recovered Late Payment Compensation on behalf of Clients!
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 extra 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.