Business news 8 August 2023
James Salmon, Operations Director.
Amazon’s new payment policy could force small firms to go bust. Rising wages expected to ease cost of living pain. Permanent staff hiring at three-year low. Wet weather dampens High Street sales. And more business news that we thought would interest our members.
Amazon’s new payment policy could force small firms to go bust
Amazon has informed thousands of marketplace sellers in the UK and Europe that it will now hold on to sale proceeds for more than a week, which could potentially lead to small firms going bankrupt.
Previously, sellers had to wait up to three days for funds to be released, but now they will have to wait 10 days after delivery. This move has caused concern among businesses, with some claiming that it could “cripple” their operations and force them to go bust.
The problem has arisen shortly after Etsy, another online marketplace, faced backlash for holding back a significant portion of sellers’ takings. The UK’s small business commissioner, Liz Barclay, has expressed concern that this issue is widespread among domestic sellers.
If you suffer late payments from large businesses who impose unfair terms on you and regularly withhold payment beyond terms, talk to CPA and see how we can help you speed up payments and get you compensated for every late payment you have suffered.
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
Rising wages expected to ease cost of living pain
Inflation figures due to be released next week are expected to show a fall in the consumer price index (CPI) from 7.9% in June to about 6.8% last month. Meanwhile, average earnings data, due to be released the following day, is likely to show a rise in wages of slightly more than 7%. The figures would represent the first time in 14 months that earnings have grown faster than inflation.
“We are moving in the right direction and we have now reached an inflection point where incomes are going to start rising higher than prices,” Ashley Webb, UK economist for Capital Economics, a consultancy, said. “There isn’t a perfect way to define the cost of living crisis but a good proxy is when CPI inflation is above average earnings growth. So, based on this measure that uses growth rates, the cost of living crisis appears to be coming to an end.”
Permanent staff hiring at three-year low
Recruitment for permanent staff has fallen at the fastest rate in three years, with businesses holding back on hiring due to economic uncertainty. According to the Recruitment and Employment Confederation and KPMG, recruitment agencies have reported frequent redundancies and hiring freezes, resulting in an increase in people becoming available to work.
However, the construction and hospitality sectors continue to suffer from significant labour shortages, leading to higher pay. Salaries for newly-placed permanent workers rose sharply, despite a decrease in the rate of inflation.
Temporary pay also increased, but at a slower pace. The jobs market remains fairly robust, with vacancies and pay still rising, but there is a need for economic growth to sustain this positive picture.
Claire Warnes, partner at KPMG UK, which helped compile the survey, said: “For job seekers, the ongoing competition for skilled workers and cost of living pressures are keeping starting salaries high, making it an attractive time to move roles, though they may be cautious about doing so. To rebalance the labour market and aid economic recovery, more focus on reversing the deepening skills gap would be a step in the right direction.”
Wet weather dampens High Street sales
UK Retail Sales grew 1.5% in July, down from 2.3% last July and below the 3.5% average over the past three months, according to the British Retail Consortium. The group said rising interest rates were also squeezing shoppers’ budgets. According to the trade body’s research, spending in July was dented by the damp weather, which did “no favours to sales of clothing, and other seasonal goods”.
Paul Martin, UK head of retail at KPMG, said that while UK consumers had proved resilient in the face of cost of living pressures, “stubbornly high inflation coupled with rapidly rising interest rates will test their ability and willingness to keep on spending for the rest of this year”.
Online non-food sales fell again, down 6.9% year-on-year, while spending on takeaways rose 9.2% and on digital content and subscriptions by 9.9%. Overall card spending rose 4% last month.
Helen Dickinson, chief executive of the British Retail Consortium, said: “While consumer confidence is generally improving, it remains below longer term levels.”
HSBC
HSBC head of public affairs has apologised after accusing the British government of being “weak” for complying with US demands to cut back business dealings with China. A spokesperson for the bank said Sir Sherard Cowper-Coles made the comments “at a private roundtable discussion and shared his personal views.”
Saudi Aramco
Saudi Aramco reported 112.81 billion riyal ($30.0 billion) in net profit for the second quarter, a fall of nearly 40% from the same period last year amid a decline in hydrocarbon prices. Second-quarter profit nevertheless came slightly above analyst expectations near $29.8 billion in an Aramco-supplied poll. In a filing to the Saudi stock exchange the company said the substantive decline was due to lower crude oil prices and weakening refining and chemicals margins.
Zoom & WFH
Even Zoom – the WFH enabler – wants its staff back in the office. Employees living within 50 miles of the office have been told to come in at least two days a week.
Italy
Italy have surprised markets with the announcement of a 40% tax on extra bank profits.
Chinese Exports
China said that exports fell by 14.5% in July from a year ago, while imports dropped by 12.4% in U.S. dollar terms – worse than what analysts had expected. A Reuters poll predicted a 12.5% decline in exports in July from a year ago, in US dollar terms. Imports were expected to have dropped by 5% during that time, according to the poll.
Britishvolt buyer misses payment deadline for acquisition
The Australian company that was meant to buy failed battery firm Britishvolt has missed the payment deadline for the acquisition. The final instalment of £8.57m, due on 5 April, remains outstanding, causing doubts about the deal. Administrators EY confirmed that Recharge Industries has defaulted on the agreement. Britishvolt, which planned to build a £4bn car battery factory in the north-east of England, went into administration in January. Recharge Industries, owned by New York-based investment fund Scale Facilitation, is a start-up with little battery manufacturing experience. The company faced issues in June when its Australian offices were raided by police over alleged tax fraud.
Average house price falls for fourth month in a row
The average cost of a property declined by 2.4% in the 12 months to July, according to the Halifax house price index. This comes after a 2.6% drop in June, meaning prices have now fallen by nearly £9,000 since their peak last summer. A typical home is now worth £285,044, down from £293,992 last August. Demand from first-time buyers is holding back further falls, Halifax said. Kim Kinnard of the lender said: “We’re seeing activity amongst first-time buyers hold up relatively well, with indications some are now searching for smaller homes, to offset higher borrowing costs.” She went on to say that strong wage growth and only a modest increase in unemployment led her to expect “a gradual rather than a precipitous decline.” Martin Beck, chief economic adviser to the EY Item Club, said one reason for the market’s resilience was that higher interest rates were feeding through only slowly to mortgage holders as fixed-rate deals expired
More families are giving away wealth to skip tax
A rising number of families in the UK are strategically giving away their wealth before they die to avoid paying inheritance tax. The number of families using the exemption to reduce their inheritance tax bill has surged 48% in the past decade. Almost 4,500 families gave away money in the 2009-10 tax year, compared to 6,610 in the 2019-20 tax year. The seven-year rule, known as a “potentially exempt transfer,” allows individuals to make gifts of unlimited value that become exempt from inheritance tax if they survive for a further seven years. However, if individuals make a gift and then die within seven years, its value eats into the tax-free allowance. The number of families paying inheritance tax has almost doubled over a decade of Tory rule, with around 27,000 estates paying the duty in the 2020-21 tax year. This is expected to rise to 47,000 families by 2028. Sean McCann, of the wealth manager NFU Mutual, said the seven-year rule was yet another way in which inheritance tax had become “fiendishly” complicated. “It frightens people,” he said. “And it has become a more pressing problem for families, we see the numbers creeping up all the time.”
Asylum fraud enablers now face life in jail
The Home Office has set up a new taskforce to identify suspicious activity among asylum claims. The body will initially focus on tackling abuse in the legal sector but there are plans to expand to other “professional enablers” such as doctors, accountants and employers who use their expertise to facilitate illegal migration. Professionals prosecuted face a maximum sentence of life in prison after measures in the Nationality and Borders Act came into effect that increased the maximum term from 14 years.
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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!
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
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.