Late payments could cause recession – business news 29 September 2020.
James Salmon, Operations Director.
Late payments could cause recession, young give up on Dream job hopes, SMEs struggle to get bounce back loans,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 could cause recession
UK firms are looking to cut costs, reduce debt and lower staff numbers as customers struggle to pay on time or in full, according to a report by Intrum.
46% of UK businesses predicted that the risk from debtors will rise over the next 12 months, a massive increase from 14% in 2019.
Two-thirds (67%) ranked a pan-European recession among their top challenges.
Late payment is threatening growth initiatives in 51% of businesses and the vast majority (80%) said they have accepted longer payment terms than they felt comfortable with over the last 12 months – nearly half did so to avoid insolvency.
While businesses were largely in favour of initiatives to tackle poor payment behaviour, less than half of those surveyed had a code of ethics in place to encourage prompt payment in their own business.
Late payment in turn damages the trust between customers and suppliers, which can have long lasting affects on business confidence and willingness to sell on credit in the future.
With late payments threatening the survival of the UK’s businesses and delayed and defaulted payments and rising arrears UK businesses must dedicate more time and resources to getting paid.
CPA has been assisting UK businesses to get paid for over 100 years. CPA has been protecting customer relations and helping business trade in confidence. Can we help you?
Young give up on Dream job hopes
The Princes Trust say more than one in three young people (35%) say they have lost hope of getting their dream job because of the covid pandemic
The charity said a survey of 2,000 people aged 16 to 25 across the UK showed 44% had lower aspirations for the future as a result of the pandemic.
Its UK chief executive, Jonathan Townsend, said the pandemic had eroded young people’s confidence. The charity said action was needed to prevent a “lost generation”.
According to the research, carried out by Censuswide, 41% of young people believe their future goals now seem “impossible to achieve”, with this rising to 50% of those surveyed from poorer backgrounds.
38% of young people,feel they will “never succeed in life”. This rises to 48% of those from poorer homes.
28% believe they will have to “take any job I can get”
43% of young people say, “I expect I’ll never have a job I really love.” This rises to 55% for those from poorer backgrounds
45% of young people say they will have to take a lower paid job just to “make ends meet”.
SMEs struggle to get bounce back loans
Concerns that a number of small firms missed out on government-backed coronavirus loans have led to calls for banks to ensure that no SMEs eligible for funding are “locked out”, with MPs saying lenders accredited under the scheme should re-open applications for bounce back loans. Mel Stride, chair of the Treasury Select Committee, said: “Accessing these loans may be a question of life or death for some of these businesses.” Pointing to reports that some eligible firms had missed out, he added: “If these reports are true, then it would be very concerning that businesses may be facing lengthy delays or are unable to access the scheme at all.” With it shown that of 28 lenders that have received accreditation to issue bounce back loans, just six are currently open to applications from new customers, Kevin Hollinrake, leader of the all-party parliamentary group for fair business banking, said a ll accredited lenders should “do the right thing”. He added that banks must “open their doors to new customers”. Shadow Business Secretary Ed Miliband has urged the Government to “work with lenders to ensure they reopen applications and assess them fairly”.
IFS: Taxes or austerity needed to cover coronavirus cost
The Institute for Fiscal Studies (IFS) has warned that the Government will need to roll out tax increases or a fresh round of austerity due to the increase in public spending in the wake of the coronavirus outbreak.
Ben Zaranko, economist at the IFS, said extra spending “could swallow up huge amounts of money, and leave some public services facing another round of budget cuts for their core services.”
He added: “Avoiding that scenario would require the Chancellor to find billions of extra funding, paid for at some point through higher taxes.”
Paul Johnson, director at the institute, said: “It is entirely inappropriate for the Chancellor to consider raising taxes this year or next, or possibly even the year after,” adding: “The longer-term answer is clearly that if we have a bigger state we will need more tax.”
The think-tank said Government spending as a share of overall economic output could rise from its current level of 40% of GDP to possibly 45% by the middle of the 2020s. The IFS also pointed to the economic uncertainty brought about by the pandemic and urged the Chancellor to abandon any plans for setting out a multi-year spending review, suggesting a one year plan would be a better option.
“Plans will depend crucially on how much of the additional £70bn of public service spending – that’s an increase of 20% on original plans – allocated this year to deal with the Covid-19 pandemic will need to be repeated in future years,” the IFS said.
“Even if only a quarter of it is needed, for example to maintain purchases of personal protective equipment (PPE) and to keep a track-and-trace system going, then overall spending would have to rise well ahead of the plans set out in the last Budget, or another bout of austerity will be visited upon many public services.”
“The next set of spending decisions is likely therefore to result in public spending settling at a higher share of national income than it was after 10 years of Labour government back in 2007-08,” it added.
A Treasury spokesperson said: “The Spending Review will proceed this autumn, as planned. The chancellor has already confirmed that departmental spending will increase above inflation – both for day-to-day spending and longer-term investment.”
BoE deputy governor warns on negative rates
Sir Dave Ramsden, a Bank of England (BoE) deputy governor, has spoken out against setting negative interest rates. He told the Society of Professional Economists that negative rates “would be less effective as a tool to stimulate the economy.” While the Bank has cut rates to a record low of 0.1%, some policymakers have called for rates to be taken into negative territory, taking the cost of borrowing below zero. Sir Dave, a member of the BoE’s Monetary Policy Committee and deputy governor for markets and banking, said: “We’re continuing with a quantitative easing programme – no one is voting at present for negative rates.” He added: “I see the effective lower bound still at 0.1%, which is where Bank rate is at present.”
Fears of UK house price bust rise after summer sales boom
With data from HMRC showing house prices in Britain reached a record high in August, Savills has predicted a short term fall of 5% to 10%.
Covid-19 general news
global confirmed deaths passed the 1 million milestone with cases passing 33 million with 275,891 new cases worldwide.
UK cases rose by 4044 on Monday with more than 439,000 cases and 42,000 deaths.
Covid is predicted to kill between 2.75 and 3 million and be among the top 5 causes of deaths.
France reported 4,070 new cases, the fewest since mid-August after an average of about 12,000 a day.
Chancellor Angela Merkel warned on Monday of a possible surge and that Germany will face more than 19,000 new Covid-19 cases a day by the end of December if the current trend in infections isn’t halted.
The pandemic is still at its peak, according to Wu Zunyou, chief epidemiologist at China’s Center for Disease Control and Prevention
“We haven’t had exposure to Covid throughout an entire winter, when more people are indoors and close together for prolonged periods,” said William Schaffner, an infectious disease professor at Vanderbilt University in Nashville, Tennessee. “We are certainly concerned that Covid could spread even more readily in the winter than it has so far.”
Markets.
The FTSE 100 climbed 1.5% yesterday and the 250 1.9% boosted by gains in the US on Friday and strong chinese data. Sterling rose after the deputy governor of the BOE played down negative interest rates but it remains under pressure from the lockdown and Brexit. . In America, where declines in tech stocks have pulled down major indexes, the Dow Jones Industrial Average and S&P 500 both rose more than 1.8%
Brexit
The European Union has doubled down on its threat to take legal action against the UK unless it withdraws its controversial internal market bill that could breach the Brexit withdrawal agreement. European Commission Vice President Maroš Šefčovič said the EU would “not be shy” in using legal methods to stop the UK implementing the legislation after the end of the Brexit transition period on 31 December.
High Street Footfall
UK High Street Footfall dropped sharply last week following the introduction of a 10pm curfew for pubs and restaurants as part of measures to reduce the spread of coronavirus. Retail footfall has been gradually increasing as coronavirus restrictions have been lifted.
Uber
Uber won its licensing battle with London’s public-transport authority. A court ruled that the ride-sharing company is a “fit and proper” operator, after its licence was removed first in 2017 on safety grounds, then again last November. Unregistered drivers had been posing as authorised ones. London’s mayor, Sadiq Khan, promised to monitor the company closely, to ensure it maintains its standards.
Firms told not to ignore HMRC letters
Firms have been advised not to ignore letters from HMRC seeking clarification over their applications to the Coronavirus Job Retention Scheme. Catriona Donald, a senior tax manager for KPMG, said letters are being sent to businesses falling under HMRC’s “risky” profile. She notes that the scheme “was brought in quickly but the rules around it changed,” adding that there “was always a fear the scheme could potentially be used fraudulently.” Highlighting that HMRC is now taking a “more standard approach to compliance”, she advises firms who are contacted to “go back and have a look at their claims to see if they need to make any corrections.”
Tax relief for home-workers
The Independent looks at the costs involved with working from home, noting that HMRC says workers may be able to claim for tax relief for things they must buy for their job. This includes the cost of things such as heating and lighting the room the person works in and the cost of business telephone calls. However, tax relief will not apply to things used for both private and business use, such rent or broadband access. Those seeking tax relief for working from home can claim a base rate up to £6 a week of additional costs without having to provide any paperwork.
Pizza Hut agrees CVA
Pizza Hut’s creditors have agreed a CVA that will see 29 of its 244 restaurants close, putting 450 jobs at risk. The deal, which will see a reduction on rents, will protect about 5,000 jobs across the sites that will stay open. Announcing the CVA process earlier in September, Pizza Hut had said it did not expect sales to fully bounce back from the blow dealt by the coronavirus lockdown until well into 2021.
Tax clarity call
Philip Aldrick in the Times says that while “no responsible Chancellor would set tax policy in the middle of a pandemic … the issue of tax cannot be ignored.” Calling for clarity on the Government’s possible stance on taxation, he says the Treasury “set some hares running in the summer” with reports that corporation tax might rise from 19% to 24%, with CGT and pensions “also said to be under the microscope”, while business rates are being reviewed and the self-employed have been warned that their preferential income tax treatment will not last. Noting comment from Chris Sanger, EY’s head of tax, Mr Aldrick says that if Rishi Sunak is planning a rethink of corporation tax, “why not say so?”
CGT rise ‘not in anyone’s interests’
Claire Madden, managing partner at Connection Capital, writes in City AM on rumours of a capital gains tax increase, saying: “Of all the potential tax rises that have been trailed in the press lately, it’s important to make the case for caution on increasing CGT – specifically as it relates to gains made from investments into SMEs. If the priority is to reboot the British economy – and I think most people would agree that it is – then any move that disincentivises investment in UK SMEs will threaten that goal.”
ICAEW: A quarter of audits are substandard
A review of audit quality by the ICAEW has found that around a quarter require improvement. Of 960 audit files reviewed in 2019, 18% required improvements and 8% needed significant improvement. The report says audits typically needed to improve because they lacked sufficient evidence, reached inappropriate decisions in key areas, failed to challenge management, or lacked adequate documentation. The ICAEW said audits of going-concern statements were an area of concern, having found evidence of “weakness in testing, insufficient scepticism and challenge of management, and inadequate documentation”. It also flagged the audit of property valuations among areas of particular concern. Michael Caplan, chair of ICAEW’s regulatory board, said: “Trust in the quality of audit underpins confidence in UK business. In the current economic climate this has never been more important.” The ICAEW does not review audits of public i nterest entities, which are monitored by the Financial Reporting Council. The Times offers a case study noting several scandals, including Deloitte’s fine for failures in its audit of Autonomy and probes into EY’s auditing of NMC Health and KPMG’s audit work at Carillion.
Trump: Tax claims are fake news
Following a New York Times report revealing that Donald Trump paid $750 (£580) in personal taxes in each of his first two years in office, the US President says he has paid “many millions” of dollars in taxes. Mr Trump described claims that he paid no personal income tax in ten of the 15 previous years as “fake news”. Responding to the report which also says Mr Trump is personally responsible for $421m of debts, most of which fall due in the next four years, the President tweeted: “I paid many millions of dollars in taxes but was entitled, like everyone else, to depreciation & tax credits.” Matthew Lynn in the Telegraph says that while critics will say the reports show Mr Trump has been dodging taxes, is a “hopeless, failed businessman” and is teetering on the edge of bankruptcy, his tax returns “don’t show anything of the sort” and “don’t look much different to any busy entrepreneur.” He adds that all the tax returns tell us is that the President is a real estate tycoon, with debt, losses and tax write-offs “completely normal in that industry”.
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 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.