UK businesses facing a new credit squeeze and other business news
30th October 2019.
James Salmon, Operations Director.
We look at a new credit squeeze for businesses, productivity gains from MTD, a fall in the number of low paid jobs, a move in the gender pay gap, a dip in employer confidence, the latest on Brexit and central bankers and I’m afraid we couldn’t ignore Brexlection.
UK businesses facing a new credit squeeze
Businesses taking out new loans are being hit with an average interest rate of 3.05% – up from 2.56% at the end of August – the highest in a decade.
The hike in the cost of credit is said to be a result of banks becoming more wary ahead of Brexit.
Businesses have increasingly been turning to the financial markets rather than banks to raise cash, with £6.5bn raised from issuing bonds last month, the most since October last year.
Mike Cherry, chairman of the Federation of Small Businesses, said: “We’ve seen a noticeable spike in borrowing rates. It adds insult to injury that rates for consumer mortgages remain at record lows while viable small firms – engines of job creation and economic growth – struggle to secure a reasonable rate.”
MTD brings productivity gains
A study by Intuit QuickBooks shows that since HMRC’s Making Tax Digital (MTD) came into force six months ago it could have helped small businesses realise over £815m in productivity gains.
The study found 29% of small businesses adopted one or more new digital services or products since becoming MTD compliant.
Chris Evans at Intuit QuickBooks said: “Adopting digital tools is essential for any business looking to grow and succeed in the modern world. Today’s findings are encouraging and show that the transition to digital has already led to tangible benefits for some businesses, such as streamlined operations, simplified tax and enhanced cash flow management.”
Sentiment towards MTD has also improved with a majority of respondents advocated a roll out to other forms of tax believing it would save them time and increase productivity.
Low-paid jobs hit record low
Figures from the Office for National Statistics (ONS) released yesterday show the share of workers in low-paid jobs – defined as no more than two-thirds of the UK median hourly rate of £13.27 – had fallen to 16.2% – the lowest proportion since records began in 1997.
The Telegraph suggests the statistics will be a boost to Boris Johnson as they as they are better figures than anything achieved under Labour.
Average weekly pay climbed 2.9% to £585 in the year to April, or 0.9% adjusted for inflation.
The figures also showed the lowest-paid 30% of the workforce getting average pay rises of more than 4% during the period, more than twice the 1.8% increase seen for the top 5% of earners.
Mind the gap
The UK’s gender pay gap has widened for the first time in six years according to figures from the Office for National Statistics (ONS).
Full-time working men were paid 8.9% more than women this year, a 0.3 percentage point rise from last year.
However, the gap has narrowed to almost nothing among people under 40 years old, while overall figures among all workers also fell from 17.8% last year to 17.3% in 2019.
One of the reasons for this difference, according to the ONS, is the fact that women over 40 are more likely to work in lower-paid occupations and are less likely to work as managers, directors and senior officials than younger women.
Chief executive of the Fawcett Society, Sam Smethers, commented that “progress to close the gender pay gap is dismally slow and at this rate it will take 60 years to eradicate it”.
Employers’ confidence dips
Data from the Recruitment & Employment Confederation (REC) show employers’ confidence in the UK economy dropped to -31 in October (0 is a neutral reading) – its lowest level since mid-2016 – as firms scale back hiring plans because of Brexit.
Neil Carberry of the REC said: “These figures show the damage that political indecision is causing.”
A separate survey by BDO found business leaders in the UK were the least confident of any major European country, with two-thirds of respondents saying they believe the economic climate will deteriorate over the next six months and only 10% believing it will improve.
FTA dependent on adherence to regulatory standards – Barnier
Michel Barnier has warned that any move away from EU standards by the UK will result in a “proportional” response by Brussels.
The EU’s chief Brexit negotiator told journalists that rolling back core social, environmental and consumer standards would jeopardise a free-trade agreement with the bloc.
Boris Johnson has promised to abide by existing standards to maintain “the level playing field” the EU requires to negotiate a free-trade agreement, the Guardian notes.
Mr Barnier, who was recently appointed to lead the EU’s taskforce on future relations with the UK, said it would be possible to negotiate “the principle elements” of an FTA to avoid an economic cliff edge before the end of 2020 but that more time would be needed to flesh out a complete deal.
The Telegraph’s Mathew Lynn says a level playing field with Brussels is the last thing the UK needs – to be caught up in its increasingly protectionist regulatory quagmire when instead the UK could “lead the world in ripping up tariffs and protections and opening up our economy.”
Johnson’s deal would leave Britain worse off – NIESR
The National Institute of Economic and Social Research (NIESR) expects Boris Johnson’s Brexit deal to leave Britain’s GDP 3.5% lower in the long term than if Britain were to remain in the EU. The think tank said the impact of customs and regulatory barriers would amount to about £70bn.
Libra threat has central banks eyeing faster payments
Claire Jones explains in the FT how the threat of Facebook’s Libra digital currency taking hold has spurred central bankers to improve cross border payment systems.
Central bankers who ignore climate change are not doing their job
In a letter to the FT, Dr Ulrich Volz, founder of the Soas Centre for Sustainable Finance, says although the impacts of climate change are complex, a central banker who ignores the problem “is simply not doing their job properly.”
Masood Ahmed, the president of the Center for Global Development, also writes to the paper to say that the disclosure of climate-related risks should be a priority for the IMF and central banks and “can only serve to improve decision-making by investors and corporate managers.”
Brexlection: Britain to vote again
British MPs voted yesterday to hold a general election on December 12th.
It will be a brutal contest. Brexit has destroyed traditional political alliances and left voter volatility at an all-time high.
Its a gamble for all parties and woe to the pollster who tries and predict the result.
For Boris Johnson, the prime minister, despite securing support in principle for his Brexit deal, obtaining a majority appears to be the only wayt to push the deal throughwithout being heavily amended.
Labour only voted for an election after Liberal Democrats and Scottish National Party support for the idea meant that one was inevitable.
For the Liberal Democrats and the SNP, the election represents a final opportunity to reverse Brexit.
To cement the sombre mood, it will be Britain’s first December election since 1923.
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 you 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.
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