business news for those who sell on credit 4 May 2021.
James Salmon, Operations Director.
A new guide to help Large and small businesses collaborate on payments, Insolvencies at lowest level since 1989, Travel troubles in focus, Barclays boss predicts biggest economic boom since 1948, Small firms eye growth, UK banks expect deluge of ‘pay as you grow’ requests from SMEs, Private sector set to rebound as economy reopens, BoE set to curb pandemic support and more of the business news we thought would interest our members and visitors.
A new guide to help Large and small businesses collaborate on payments
The British Services Association (BSA) have released a new supply chain guide to help tackle the late payment culture and help large and small businesses work together. They said the guide will “highlight challenges faced by smaller firms” and “identify routes to collaborative working”.
The BSA said the new guide, found here, will help the smallest and largest organisations come together to benefit from a “healthy and more diverse supply chain” through “partnership working”.
It also highlights the significance of the Prompt Payment Code, aligning objectives, social values, and building relationships.
Mark Fox, Chief Executive of the BSA says “Everyone needs to contribute in full if the UK is to recover quickly, sustainably and equitably,”
“That means the public sector, and private sector and VCSE organisations large and small, together in harness, working towards the same common goals.
“This Statement sets out some examples of what has been achieved. But we are all on a journey, and we recognise that much more needs to be done. We hope this Statement will highlight examples which all larger businesses can learn from and adopt.”
Welcoming the guide, Small Business Minister Paul Scully added: “This welcome statement from the BSA highlights the importance of businesses working together and paying their partners on time, and builds on the government’s work with the Small Business Commissioner to tackle the toxic issue of late payments.”
It was a few months ago, that the Prompt Payment Code payment period would be cut in half, from 60 to 30 days, to help small businesses.
Insolvencies at lowest level since 1989
Company insolvencies in England and Wales fell to their lowest level in more than 30 years in Q1, with support measures rolled out amid the pandemic helping businesses ward off insolvency. Data from The Insolvency Service shows that the number of businesses declared insolvent fell to 2,384 in the first three months of 2021 from 3,053 in Q4 2020. Seasonally adjusted, this marks the lowest level since Q1 2011, while in non seasonally adjusted terms, it is the lowest number of insolvencies since the third quarter of 1989. Reflecting on the impact of insolvencies, Lisa Ashe, a partner at EY-Parthenon, said: “A significant increase in insolvencies could have a wide-ranging impact on the wider business network.”
Travel troubles in focus
On Saturday, The Times considered the climate for travel firms amid the ongoing ban on non-essential overseas trips and uncertainty over how the sector will be unlocked as restrictions are eased. The paper noted that 26 agencies registered with the Association of British Travel Agents have ceased trading during the pandemic, while the business distress index from Real Business Rescue, part of Begbies Traynor, shows that 1,669 of the UK’s estimated 4,000 travel agencies were in “significant distress” in Q1, up 50% on the same period last year.
Barclays boss predicts biggest economic boom since 1948
Barclays boss Jes Staley believes the UK is set to see its biggest economic boom since the late 1940s, saying a post-pandemic rebound is set to be driven by the coronavirus vaccine programme and built-up savings, with an extra £200bn estimated to be sitting in customer and company bank accounts. Mr Staley said: “We estimate the UK economy will grow at its fastest rate since 1948. That’s pretty spectacular”. He added that “tremendous pent-up demand” will deliver economic growth of around 6.5% in 2020. Mr Staley also noted that Barclays thinks a robust economic recovery in 2021 “will carry through into 2022.”
With Barclays boss Jes Staley predicting that the economy is set to grow at the fastest rate since 1948, caution is still needed. While the next few months may feel like a boom, experts expect the pandemic to leave “lasting scars”. While economists have pointed to blistering growth of as high as 8% in 2021, that would still fail to make up for the dismal 9.8% fall in output seen last year. On the impact on businesses, a Begbies Traynor poll suggests more than 700,000 firms are in significant financial distress as a result of the pandemic. Mr Lynch adds that PwC has noted that insolvencies only peaked after the recession of the 1980s and 1990s had ended as rebounds put pressure on indebted businesses.
Small firms eye growth
A poll by Hitachi Capital Business Finance has found that 78% of SMEs are working on growth plans, with confidence about the economy increasing. The survey saw almost half of the SME owners quizzed say increasing sales is their top priority, while 28% said launching new services or products and 23% pointed to a focus on reducing costs and building up financial reserves. It was also shown that confidence is at a two-year high. Joanna Morris, Hitachi Capital’s head of insight, said: “Small businesses are the bedrock of the UK economy, so it is encouraging to see that they are still standing tall and looking forward at a time when many larger organisations are evaluating the impact of Covid-19.”
UK banks expect deluge of ‘pay as you grow’ requests from SMEs
Banks are expecting many SMEs to request extensions or repayment holidays for coronavirus rescue loans, with the initial wave of Bounce Back Loan Scheme borrowers due to begin making repayments this month.
Private sector set to rebound as economy reopens
The private sector is set to see a boom as the economy reopens this summer, with growth anticipated to hit its highest level in six years. The Confederation of British Industry (CBI) expects private sector activity to grow 32% in the next three months, a rate that marks its strongest growth prediction since June 2015. Growth in business and professional services firms is expected to hit 48%, the steepest increase since April 2014, while manufacturers could see growth of 36%. Consumer services firms expect activity to remain flat in the next three months, increasing 1% from 10%. Alpesh Paleja, lead economist at CBI, said: “Economic growth appears to be poised for lift-off over the summer. But this is a recovery that will be felt differently across sectors.” CBI analysis shows that private sector activity rose 24% in April.
BoE set to curb pandemic support
The Bank of England is set to pull back on stimulus rolled out during the pandemic amid increasing optimism over the state of the economy. Economists believe that the Bank’s Monetary Policy Committee (MPC), which is currently buying £4.4bn of government debt a week under its asset purchase programme, could cut weekly purchases by almost half as it lifts growth forecasts this week. Philip Shaw, Investec’s chief UK economist, said: “The pace of bond-buying has to slow down and it would make sense to announce that this week.” He added that with the growth outlook “getting stronger and stronger”, the MPC is “likely to acknowledge that.” Deutsche Bank economist Sanjay Raja expects the Bank to increase its GDP forecast to closer to 7% and bring forward its forecast for a return to its pre-pandemic level to the end of the year, rather than Q1 2022.
The Bank is reportedly going to raise its growth forecast when it publishes its latest monetary policy report on Thursday. In its February update the Bank forecast a 5% rise in output this year, with this following a 9.8% pandemic-driven slump in 2020. Howard Archer, chief economic adviser to the EY Item Club, said the economy looks to have started Q2 “very much on the front foot”, adding that it benefited from easing of restrictions and the vaccine rollout, while further near-term support to the economy provided in March’s Budget “also seems to have lifted confidence”. The EY Item Club believes growth could hit 6.8% in 2021.
Prices rise as ink dries up
A Sun investigation has found that the price of printer ink jumped during the coronavirus lockdown, with some cartridges 75% more expensive at a time when more people were working from home and students were being taught remotely. Manufacturers including HP, Canon and Epson said they experienced stock shortages due to increased demand. The paper notes Deloitte analysis showing that sales of home printers grew by 15% in 2020.
Government taskforce calls for permanent job flexibility
The Government’s Flexible Working Taskforce has suggested flexible working should be a right for all employees, regardless of the type of contract they are on. Taskforce member Sue Coe, senior equality officer at the TUC union, said: “Flexible working should be a day one right that’s available to everyone. Workers shouldn’t have to go cap in hand to their managers to ask for it.” Peter Cheese, co-chair of the taskforce and chief executive of the Chartered Institute of Personnel and Development (CIPD), said guidance being drawn up by the taskforce offers “an opportunity to shift ways of working, which have barely changed for generations”. A CIPD poll has seen more than 60% of employers say they plan to introduce or expand the use of hybrid working, while over 70% said homeworking had no detrimental impact on productivity in the pandemic. It also found that 44% of employees have not worked from home at all during the pandemic as their jobs do not allow it.
4 in 5 furloughed staff would consider job they’re overqualified for
Research by consultancy firm NTT DATA UK shows that 79% of workers on the Government furlough scheme are considering applying for jobs they are overqualified for if they cannot return to their role. Those on furlough for a longer period of time were more likely to consider lower skilled jobs (80%) than those only furloughed since December 2020 (74%). The study also found that 62% of people fear they will not have a job to return to after furlough. It was also found that 31% have not been learning new skills while not working, while 51% were doing free training online and 11% had been provided with training by their employer.
Brits spent £93bn online in 2020
Britons spent £93bn shopping online in 2020 – up from £64bn in 2019, a United Nations study has revealed. The study shows that 23.3% of all UK retail sales were online last year, up from 15.8% the year before. Meanwhile, figures from the Office for National Statistics show that UK sales rose by 5.4% in March. Lisa Hooker, consumer markets leader at PwC, said that while the figures “will give cheer to the whole sector, retailers will be hoping that these positive signs translate into a sustained return to the physical stores as they reopen across the UK over the course of April.”
AstraZeneca
AstraZeneca’s revenue in the first quarter of 2021 jumped 15% to $7.32 billion from $6.35 billion a year earlier. Pre-tax profit climbed 72% to $1.61 billion from $935 million.
Eurozone recession
The Eurozone Economy has fallen back into recession as the impact of the pandemic continues to hit activity. Europe’s economies have been set back by a renewed surge in infections this year. The eurozone shrank by 0.6% in the January-to-March period – the second consecutive contraction – after 0.7% contraction the previous quarter. Germany’s economy fared particularly badly, with GDP contracting by 1.7% quarter-on-quarter. Spain’s and Italy’s also shrank, though France’s grew slightly
Why should you become a CPA member!
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 some time to come.
CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. And we provide credit information so you can monitor and assess your key customers.
Unlike other credit management companies, we charge our members a fixed annual subscription irrespective of how high the debt value is!
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.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Get compensated for previous late payments
Have you been paid late by business customers in the last six years?
Maybe you no longer work with them. Under legislation, you are entitled to compensation you for those late payments you have suffered.
You put up with the PAIN – now claim the GAIN!
Claim late payment compensation (LPC) from former business customers who paid you late in the last six years!
CPA (LPC) Recoveries is using our bespoke software and decades of experience to do just that for our clients
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.