Business news 26 July 2024
Small businesses suffer longest late payments times since pandemic.GDP, tax, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Small businesses suffer longest late payments times since pandemic
Late payments hit a post-pandemic high in June with retail and hospitality businesses being the worst affected. Analysis by accountancy firm Xero showed that payments were made on average 7.3 days late between April and June, an increase of 1.8 days compared with the previous quarter and the largest increase in four years.
Small businesses also waited an average of 29.1 days to be paid over the last three months, 1.2 days longer than the previous quarter.
Xero’s figures also showed sales were more muted, with a 1.3% increase year on year in May, before falling 5.2% year on year in June!
The June fall is attributed to the election but small businesses are still selling fewer goods and services than they did a year ago, forcing them to navigate tricky and uncertain economic conditions.
Kate Hayward, Xero’s chief in the UK, said: “To wait over a week for payment owed is an unacceptable and unsustainable financial model for small businesses.” going on to add “As our data has shown, small businesses are being held at the mercy of late paying customers. Labour pledged a robust stance on late payments in their manifesto, and we urge them to swiftly convert their commitments into action through introducing legislation as part of the Draft Audit Committee Bill.”
As CPA has previous mentioned, the Kings speech offered nothing to small business, especially on late payment
If you are worried about late payments, talk to CPA about how we are using existing legislation to combat this problem. For over 100 years we have been tackling late payers for our SME members while maintaining goodwill.
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.
UK economy surprises with strong growth
The UK economy has been growing at a much faster rate than expected, surprising economists. In the first quarter, the economy grew by 0.7%, making it the fastest growing economy in the G7. Economists predict that this strong growth could continue in the second quarter. The UK’s output gap, which measures how far output is from its potential, was underestimated, leading to stronger growth this year. Additionally, consumers have been benefiting from inflation being back at 2% and strong wage growth, resulting in increased disposable income. The savings ratio has also increased, indicating that households are saving more. With inflation under control, the Bank of England is likely to cut interest rates, further supporting economic growth. Money markets now suggest there’s more than a 50% chance the BoE will cut rates next week, and a 92% chance it will happen by September.
Markets
After Wednesday’s fall in Tech shares tore through global markets, some stability returned yesterday, the FTSE 100 closed up 0.39% at 8185.35 while the Euro Stoxx 50 closed down 1.03% at 4811.77. Overnight in the US markets slipped further despite the GDP data with the S&P 500 sliding 0.51% to 5399.22 and the NASDAQ dropped 0.93% to 17181.72 as US investors turned attention to the soon to be announced inflation figures.
This morning on currencies, the pound is currently worth $1.286 and €1.186. On Commodities, Oil (Brent) is at $82.3 & Gold is at $2372. With stock markets, the FTSE 100 is up 0.89% at 8260 and the Eurostoxx 50 is up .88% at 4854.
US GDP
US Economic Growth was faster than expected in the second quarter, the latest update from the Bureau of Economic Analysis shows. The advance estimate of second quarter US gross domestic product showed the economy grew 2.8% compared to a year earlier, much faster than the 2% economists has forecast on average. It was also faster first quarter GDP, which was revised down to 1.4%.
BT
BT heralded progress in its fibre roll-out, but said legacy issues and pressures in its Business and Consumer units lead to revenue falling. In the three months to 30th June, the London-based telecommunications provider said reported pretax profit fell 3.0% to £520 million from £536 million a year prior. Decreased revenue was broadly offset by a reduction in reported operating costs, BT noted.
Natwest
NatWest shares rises as much as 9.1% to an eight-year high after the British bank reported second-quarter figures including a higher-than-expected pretax operating profit.
Evri sold for £2.7bn
Evri, the parcels delivery group formerly known as Hermes UK, has been sold by its private equity owner, Advent International, to Apollo Global Management for £2.7bn. The sale attracted interest from JD.com, InPost, and Cainiao. Alex van Hoek, a private equity partner at Apollo, praised Evri’s position in the sector and its customer base of over 12m. The deal comes amid a spate of dealmaking in the logistics industry, with Yodel and International Distribution Services also being sold. Martijn de Lange, the CEO of Evri, thanked Advent for their partnership.
Revolut wins banking licence
The Prudential Regulation Authority has authorised a banking licence for Revolut, allowing the UK fintech to provide overdrafts, loans and savings products to its more than 9m UK customers. The London-based company first applied for the licence in early 2021 but the application ran into multiple problems. This is “a significant step forward for Revolut” and its customers, UK Chief Executive Officer Francesca Carlesi said in the statement. Revolut was last valued at $33bn in a 2021 fundraising round, but is in talks to sell about $500m worth of shares in a deal that would value it at about $40bn.
Reeves lays the ground for October tax hikes
The Chancellor is expected to reveal a £20bn hole in government spending for essential public services on Monday. Critics say the review is being used to justify significant extra tax hikes. But Labour sources blame the Tory government for a “shocking inheritance” and accuse the former chancellor of “presiding over a black hole and still campaigning for tax cuts”. Rachel Reeves is expected to announce tax changes in the budget in October, although Labour has ruled out changes to income tax, VAT, national insurance, and corporation tax. Tax-raising options on offer include limiting inheritance tax relief and removing the capital gains uplift on inherited assets. Speaking on the sidelines of the G20 meetings in Brazil, Reeves said: “We’ve inherited a mess. I am going to fix the mess. I will never make unfunded commitments. I will never make promises without saying where money is going to come from.”
Labour warned against scrapping IHT relief for family businesses
Labour has been warned against scrapping or cutting inheritance tax relief for family businesses. Currently, business relief allows family firms to be passed on to the next generation with a reduction on the death tax. Family Business UK (FBUK) cautioned that removing the exemption would discourage owners from investing and could lead to businesses being broken up or closed. The Institute for Fiscal Studies (IFS) estimated that capping the relief at £500,000 would raise £1.1bn a year, while abolishing it would generate £1.4bn. FBUK analysis shows that family-run businesses account for half of all UK private sector employment. Steve Rigby, a director of FBUK, suggested introducing a clawback mechanism if beneficiaries do not hold the business for a minimum period.
Advisers reveal how QNUPS could save wealthy millions in IHT
The Guardian sneaked into a private event in the City before the General Election during which wealthy individuals were advised on how they could shelter their fortunes from inheritance tax and capital gains tax. The paper filmed advisers explaining how clients could use a qualifying non-UK pension scheme (QNUPS) to shield their assets. An adviser from Baker Tilly Isle of Man revealed how a client sent £30m through the product, potentially saving his children about £12m in IHT. Claire Aston, the director of the campaign group TaxWatch, said: “Given the new Labour government’s commitment to clamp down on tax avoidance, this looks like a great place to start. The law needs to change to stop UK resident taxpayers shuffling valuable assets offshore for the sole purpose of saving tax.”
Banks borrow record sums from BoE repo
Financial institutions tapped the Bank of England’s short-term repo (STR) facility for over £30bn this week, up from £700m at the start of the year. As the BoE shrinks its balance sheet after years of expansionary programs, banks are increasingly reliant on repos for funding, although executive director for markets Vicky Saporta says she’d like to see more borrowing from the six-month indexed long-term repo facility, which allows banks to pledge illiquid assets in return for reserves, as opposed to the gilts pledged for repos.
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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 supported our members through all sorts of difficult trading environments. With high interest rates and a struggling economy and elevated insolvencies, our services can help your business navigate these difficult waters.
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 and be warned of any potential risks.
Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the value of their debts maybe!
Rather than to turning to more debt, CPA suggests that business owners tackle the problem at its source. If late payments are a strain on your cash flow, then talk to CPA about how we can help you reduce those late payments.
CPA has been improving business cash flow for over 100 years, by tackling late payers and campaigning against the late payment culture in the UK. CPA’s overdue account recovery service is a polite, efficient service designed to encourage prompter payments while maintaining goodwill. We direct your customers to pay directly to you, not to us and want to support and reinstate your direct relationship with your customer, not take it over, destroying goodwill.
Unlike other credit management companies, our overdue account recovery service is available to our members on a fixed annual subscription so you can pass any overdue accounts to this service and it is included in your subscription!
Our Overdue account recovery service resolves over 80% of accounts referred to us although our collections department is there to escalate the collections process on the remaining few if you require it.
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.