Business news 19 March 2024
Late Payments hampering growth. Late payment a problem in global supply chains. Nearly 7m Britons struggling financially. Rising costs propel credit card debt up by 10%. And more business news that we thought would interest our members.
James Salmon, Operations Director.
Late Payments hampering growth
Small businesses are hampered by late payments and have cooled their growth expectations for 2024, according to the Small Business Index (SBI) for Q4 2023, published in full by the Federation of Small Businesses. The report covers the period of the technical recession in Q4 and highlights the mood among small businesses. Only 25% of firms were expected to be able to increase capital investment and less than half (48.2%) anticipated growth.
Those experiencing late payments rose from three fifths in the third quarter (60.8%) to nearly two thirds in the fourth quarter (65.8%).
The proportion of small firms whose late payments worsened over the quarter, also rose from over one in four in Q3 (27.9%) to over a third in Q4 (34.9%).
Martin McTague, FSB’s National Chair, said: “Late payment is a scourge, and one that shouldn’t exist – there’s no excuse, with modern business banking methods, for large companies to hold onto money due to small suppliers. Overdue invoices cause uncountable amounts of stress and harm to small business owners, leading to sleepless nights and lost productivity. Large companies should make their payment performance a board-level issue, and include it in annual reports, to improve accountability and transparency.
“Small firms contain the dynamism and the ambition to grow that will get the economy up and running, if they are given the right conditions to flourish, invest, and make their mark.”
Are you affected by late payments? 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.
And CPA is also working with trading companies and with the insolvency practitioners of companies driven into insolvency who have been impacted by historic late payers and helping them to get compensation for the late payments they suffered from former non-consumer customers over the last six years.
Check our compensation calculator to see how much your business could be owed!
Late payment a problem in global supply chains.
The proportion of suppliers in global supply chains affected by late payments has risen dramatically in the past two years, According to research by Taulia, a growing number of suppliers are reporting delays of more than 45 days. Over half of the 11,300 companies it polled in November 2023 were typically paid late by their buyers.
“More suppliers than ever before [are] experiencing late payments,” says Taulia, which notes that 51% of firms on average are paid after the invoice due date.
“The global pandemic changed behaviour significantly,” says Bob Glotfelty, chief growth officer at Taulia, who noted that early payments leapt during the Covid-19 crisis as buyers worked to help suppliers manage the distortions in the global trading environment. “Since then, late payments have been on the rise. Assuming no major global events this year, unfortunately, I would expect 2024 to see marginally worse late payment behaviour”
A staggeringly small 3% of companies said on average they are paid before the invoice due date, while 44% reported being paid on time.
Taulia further adds that buyers reporting that they are paid more than 45 days late have been “creeping up” in recent years from 3% in 2019 to 8% last year, the “highest level” recorded since the survey began.
Nearly 7m Britons struggling financially
A record 6.7m people in Britain are facing financial difficulty, with 13% of adults missing three or more credit or bill payments in the last six months. Among 18- to 24-year-olds, this figure rises to 29%. The cost of living crisis has pushed more households into debt, resulting in a surge in requests for help with problem debts. Official figures show a 23% increase in the number of people becoming insolvent. Joe Cox, a senior policy officer for Debt Justice, stated that the household debt crisis is becoming more entrenched.
Rising costs propel credit card debt up by 10%
Outstanding debt on UK credit cards increased by nearly 10% in the past year, as households turned to borrowing to cope with inflationary pressures and rising living costs. The number of credit card transactions rose by 3.8% to 371.4m, with a total spend of £19.2bn. This suggests that more households are relying on debt to cover their bills and expenses. UK Finance’s data also revealed a 76% year-on-year increase in credit card complaints, with consumers criticising high interest rates and credit limits. The Bank of England reported a record interest rate of 21.29% on interest-bearing cards in January. Debit card spending decreased by 1.4% to £68.4bn, while transactions using debit cards still outnumbered credit card transactions.
Reeves vows to resuscitate growth unit to boost economy
The shadow chancellor will give the Treasury’s Enterprise and Growth Unit more power to influence policy if Labour wins the next election. In a speech today, Rachel Reeves will say she will do more to ensure the Budget fuels growth rather than balancing the books. She is also expected to compare the economy to the 1970s, when Margaret Thatcher built a new economic model, saying: “Unlike the 1980s, growth in the years to come must be broad-based, inclusive, and resilient. Growth through stability – built on the strength of our institutions.”
Grid upgrade needed
The UK’s electricity network needs almost a further £60 billion of upgrades to hit government decarbonisation targets by 2035, according to a new plan from National Grid. Some 4,000 miles of undersea cables and 1,000 miles of power lines including pylons are needed. The investment will add between £20 to £30 a year to customer bills, it warned.
Nvidia
Nvidia Chief Executive Officer Jensen Huang showed off the companiy’s new chips aimed at extending their dominance of A.I. computing. The new processor design called Blackwell is multiple times faster at handling the models that underpin AI.
Apple Google & AI
Apple is reportedly in talks to build Google’s Gemini artificial intelligence engine into the iPhone iOS 18, in what what would be a huge deal cementing the alliance between the two tech titans that would shake up the AI industry.
Autonomy
Former CEO of Autonomy, Mike Lynch is facing financial ruin after losing a civil case regarding the sale of the tech company to Hewlett Packard and the alleged fraud over the revenue numbers.
Haleon
Pfizer is reportedly preparing to sell its £2 billion steak in the UK consumer health company that was spun out of a joint venture with GSK
Evergrande accused of fraud
Chinese property giant Evergrande and its founder have been accused of committing $78 billion in fraud by inflating revenues for two years before defaulting on its debt and being order in to liquidation by a Hong Kong court.
Eurozone Inflation
Eurozone Inflation slowed to 2.6% in February from 2.8% in January, Eurostat has revealed. Monday’s figure reiterates the region’s flash figure from the end of last month and sees inflation at its slowest since November 2023. Food, alcohol and tobacco inflation also slowed from 5.6% in January to 3.9% last month. Energy prices in the European region also sped up from January, with February prices 3.7% lower than in 2023, compared to being 6.1% lower at the start of the year.
Japan
The Bank of Japan raised interest rates on Tuesday for the first time since 2007, ending the world’s only negative rates regime on early signs of robust wage gains this year. The Bank of Japan though cautioned it’s not about to embark on aggressive rate hikes, saying that it “anticipates that accommodative financial conditions will be maintained for the time being,” given the fragile growth in the world’s fourth-largest economy.
Unilever de-ices
Unilever has announced a major operational overhaul through the separation of its multibillion-dollar ice cream portfolio and the termination of 7,500 firm-wide staff members. “Ice cream has a very different operating model, and as a result the board has decided that the separation of ice cream best serves the future growth of both ice cream and Unilever”
Wickes
Wickes said that revenue in 2023 was virtually flat at £1.55 billion compared to £1.56 billion a year earlier. Pretax profit in the period rose to £41.1 million from £40.3 million. Wickes announced a final dividend of 7.3p, giving a total of 10.9p for the full year, in line with guidance. Looking ahead, the company said: “We maintain good cost control and have productivity plans in place for 2024, however these will not offset fully the cost headwinds from the scale of increases in national minimum wage and business rates.
UK regulators warn against threatening debt collection tactics
A letter signed by the Financial Conduct Authority, the energy regulator Ofgem, the water regulator Ofwat and the communications watchdog Ofcom, calls on companies to improve their debt collection practices, after identifying shortcomings across the financial services industry, as well the communications, water and energy sectors. The regulators warned that they will take “robust action” against firms whose behaviour risked affecting customers’ mental and physical health, or leads them to make decisions not in their best interests. Their warning comes during debt awareness week, which is meant to highlight the support that is available to struggling borrowers.
BoE urged to align financial sector with UK climate goals
More than 50 leading economists and campaign groups have written a letter to Bank of England Governor Andrew Bailey, urging the Bank to align the financial sector with UK climate goals. The letter warns that the Bank is falling behind other major central banks in its work on key green measures. They also say the Bank should not use the excuse that the Treasury changed its list of priorities for the financial services sector, stating that climate remains within the financial policy committee’s core mandate for financial stability and remains within the Government’s broader economic policy objectives. “Such a change should not undermine the Bank’s work in this area,” they wrote.
Green freeports have tax relief extended
Tax relief for green freeports is set to be extended until 2034, following an agreement between UK and Scottish ministers. The extension applies to the Inverness and Cromarty Firth Green Freeport, the Forth Green Freeport, and prospective investment zones in Glasgow City Region and the North East of Scotland. Green freeport status offers special tax incentives and lower tariffs around ports, with the aim of stimulating economic growth. Scottish ministers have backed the plans, which were first announced by Chancellor Jeremy Hunt in his spring Budget. Deputy First Minister Shona Robison expressed support for the extension, stressing the importance of clear policy commitments in relation to the transition to net zero and fair work principles. The extension provides an opportunity for the green freeports to have a positive impact on businesses, communities, and Scotland’s wider economy.
Government wants flying taxis to take off by 2026
The UK Government has announced plans for the first flying taxi to take off in the country by 2026, with regular sightings expected by 2028. The Future of Flight action plan, developed in collaboration with the aerospace industry, also predicts the first pilotless flying taxi to launch in 2030. The plan aims to improve transportation and boost the economy by embracing autonomous drones and flying vehicles. However, the biggest obstacles to getting flying taxis into the air are infrastructure and public perception, says Craig Roberts, head of drones, at PwC. Last year, he co-authored a report on the topic, in collaboration with the Government, on the viability of the technology. “It’s challenging, but possible,” he says of the 2026 target. The convenience would also have to be demonstrated to the wider public through technological advances in security screening.
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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.