Business news 6 March 2024
Late payments now cost small businesses £1.6bn. Jeremy Hunt urged to support Britain’s small firms suffering late payments. Private sector growth points to end of recession. A national insurance cut? non-doms to be modernized? Companies House clamps down on scammers. FCA to probe personal guarantees requirements & more business news that we thought would interest our members.
James Salmon, Operations Director.
Late payments now cost small businesses £1.6bn
The cost of late payments to small businesses has more than doubled in two years, reaching £1.6bn at the end of 2023, according to a report by Xero.
This reflects the rising cost of not receiving payment in a timely fashion. Xero UK’s managing director, Alex von Schirmeister, called for big businesses to be held accountable for late payments, stating that small firms are being drowned by “unapproved debt”.
The report also revealed that small businesses were paid an average of 6.1 days beyond their agreed terms in the last three months of 2023.
Will the government do anything? CPA has been banging this drum for decades.
Jeremy Hunt urged to support Britain’s small firms suffering late payments
Emma Jones, the founder of Enterprise Nation, a support platform that has helped 700,000 people to start and grow their small businesses, urges the Chancellor in a piece in the Mail to pull out all the stops in his Budget to help small businesses invest in future growth. “Inflation, unmanageable energy bills and rising staff costs have meant that there’s no room left for them to stand back and plan. And they are still being paid late.”
The legislation exists to tackle late payments with compensation and interest being statutorily due. Even then, those compensation levels were set 20 years ago and they need to be given an inflation linked rise. Even-so, because of the risk to goodwill, few use late payment compensation.
Legislation could be used to beef up the compensation, to reduce the maximum terms allowed to 30 days and to mandate that businesses pay compensation when they pay late, and provide for the compensation liability in their accounts.
CPA has been helping businesses claim late payment compensation from former business customers who paid late. Now we are working with insolvency practitioners to claim back compensation from the non-consumer customers who paid the insolvent firms late over the last six years.
Hopefully, the message will get across. Paying your suppliers late is not free! it will cost you. Do don’t use your suppliers as an unofficial line cash flow supply.
Private sector growth points to end of recession
A closely-watched measure of the UK’s private sector economy rose slightly in February, continuing a sustained upward trend. The S&P Global and CIPS composite PMI hit 53 in last month, up from 52.9 in January and the strongest reading since May last year. The figure was above the 50-point threshold that separates growth from contraction for the fourth month in a row. However, the figure is down from an initial estimate of 53.3. The services sector PMI was revised down too, from the first reading of 54.3 for last month, to 53.8. However, Tim Moore, economic director at S&P Global Market Intelligence, said that the above 50-point readings indicated “that the UK economy has turned a corner after entering a technical recession during the second half of 2023”.
Hunt to announce £10bn personal tax cut in the Budget
The Chancellor is expected to announce a 2p cut to National Insurance when he delivers his Budget today. It will be the second cut to the levy in four months, reducing it to 8%. According to the Times, Jeremy Hunt and the Prime Minister, Rishi Sunak, decided against cutting income tax after the Office for Budget Responsibility said there was less “fiscal headroom” available than hoped. A cut of two percentage points in employee national insurance costs about £10bn a year, while a 2p cut in income tax would cost £13.7bn a year, because it includes both workers and pensioners. It would also apply to the whole of the UK. It is thought the cut to NICs, which will be worth £450 for the average worker, will come into effect in April. Combined with the existing 2p cut to NICs announced in the Autumn Statement last November, workers will be £900 better off. The tax cuts, which the Resolution Foundation says will only benefit those paid between £27,000 and £59,000 a year, are likely to be paid for with tax rises and around £3bn of public spending cuts.
Chancellor to modernise non-dom regime
Jeremy Hunt is reportedly considering axing the “non-domiciled” tax status to raise funds for the spring Budget. Non-doms can avoid paying tax on overseas earnings in return for an annual £30,000 fee. Research from the London School of Economics found that scrapping the special exception would raise over £3.2bn a year. However, the Institute for Fiscal Studies this week pointed out that there are around 37,000 people claiming the non-dom tax exception in the UK, paying a collective £6bn in UK taxes. Any major change, they argue, could see many of them leave the country – taking this revenue with them. The FT reminds readers that axing current non-dom rules is a policy previously advocated by Labour and opposed by the Chancellor. Mr Hunt will reportedly modernise the system, replacing the concept of domicile in tax with a statutory residence test that would define who benefits from a new system of tax privileges. Mr Hunt will also encourage wealthy people to bring their foreign-held assets and money to the UK.
Companies House clamps down on scammers
Companies House, the UK’s central corporate register, has announced new powers to clamp down on scammers using other people’s names and addresses to file fraudulent companies. The changes, described as the most significant in the register’s 180-year history, aim to tackle fraud, money laundering, and other forms of economic crime. The reforms include stronger checks on company names, removal of factually incorrect information, and the requirement for all companies to supply a registered email address. New criminal offences and civil penalties have been introduced for rule-breakers. The changes will cost at least £50 to register a company in the UK. Business minister Kevin Hollinrake believes the reforms will enhance the UK’s reputation as a safe place to do business.
FCA to probe banks requiring personal guarantees for small business loans
The Financial Conduct Authority has said it will investigate the practice of requiring personal guarantees from directors of some small businesses when banks lend to them. The move comes in response to a “super-complaint” made in November by the Federation of Small Businesses, which claimed that excessive requirements for personal guarantees were a “straitjacket” on business growth. However, the FCA said it could only look at how it affected the smallest traders as most business lending was outside its remit. Martin McTague, national chairman of the FSB, said: “The FCA’s response is just not good enough. Our super-complaint outlined why there is a potentially a systemic problem when it comes to personal guarantees, and the chilling effect they have on growth and investment. For the FCA to refuse to gather evidence from regulated lenders, which would illustrate the scale of the problem affecting limited companies, is illogical.”
Services
UK Services continued to grow in February, albeit at a slower pace, according to a survey released yesterday. The services purchasing managers’ index (PMI) fell to 53.8 from 54.3 in January, coming in below the first estimate and consensus of 54.3. However, the index was still higher than at any point in the second half of 2023.
Bitcoin
Bitcoin surged to its first record high since November 2021 yesterday when it passed the $69,000 mark. The cryptocurrency is up 40% so far this year.
Travis Perkins
Travis Perkins said 2023 was marked by ‘weak market conditions’ as revenue and profit decreased, and it declared a considerably reduced full-year dividend. The builders’ merchant said its pretax profit for 2023 was £70.0 million, down 71% from £245.0 million the prior year.
Latest Insolvencies
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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 offer our members a fixed annual subscription regardless of how high the debt value maybe!
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
Do you have a commercial late payer that is causing you grief? Use CPA’s no-win, no-fee, commercial debt recovery service!
If you have a particular business customer who is late paying and causing you sleepless nights, why not offer it to CPA for purchase on recourse?
CPA’s collection department will then pursue the debt. We will be liable for any costs incurred and then when we have recovered the debt, we will pay you the net principle debt recovered less our percentage.
Once you have enjoyed that success then you can consider the more cost effective membership which includes our Overdue Account Recovery service and Status/Credit reports as well as a range of other complimentary services.
Just call 020 8846 0000 and ask for Godfrey Nelson or Cris Shirley (business hours) or email debtpurchase@cpa.co.uk today.
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
Check our compensation calculator to see how much your business could be owed!
Discover NOW the potential value of late payment compensation hidden in your sales ledger!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.