Business news 27 May 2022
James Salmon, Operations Director.
Late Payments worsen for Small Businesses. Rishi Sunak announces windfall tax to help fund support measures. Windfall tax will extend to electricity firms within weeks. Rishi Sunak’s support package a temporary salve for struggling families. Two-thirds of British firms hit by fraud. And more business news.
Late Payments worsen for Small Businesses
Small businesses had to wait an average of 29.9 days to be paid in April according to the latest figures from Xero.
Average late payment days increased by 1.8 days to 7.7 days. This is the longest small businesses have had to wait to be paid since September 2020.
Xero’s Small Business Index fell to its lowest reading since February 2021 and had its biggest fall since the pandemic lock-downs started in April 2020. Based on anonymized and aggregated data from hundreds of thousands of Xero’s small business clients, the Index fell 11 points to 83 in April.
The late payments and falling index reflect the tougher economic conditions caused by rising inflation as the UK’s SME’s are facing soaring energy bills and rising wages on one side, and slower consumer spending power and late payments on the other side, as their cash flow is caught in a pincer movement.
Rishi Sunak announces windfall tax to help fund support measures
The Chancellor yesterday announced a £15bn package of support for UK households as inflation hits a 40-year high and energy bills soar. Measures, including a £400 discount on energy bills for all households and a £650 one-off payment for the poorest, will be partly funded by a windfall tax on oil and gas companies. Rishi Sunak’s U-turn on a one-off levy on energy company profits was received with dismay by some Tory MPs, with Richard Drax declaring that Sunak was “throwing red meat to socialists”. The North Sea oil and gas industry was not impressed either – BP described the announcement as a multiyear proposal, not a one-off tax, which will result in the company having to re-evaluate its investment plans. Shell said Sunak’s proposed tax relief on investments was “a critical principle in the new levy” but stressed the “importance of a stable environment for long-term investment”. The Chancellor said companies that reinvested their profits in British oil and gas exploration would get back 90% of the new tax in relief. The 25% tax on “excess profits” will raise just £5bn of the total package leaving a massive borrowing black hole for Sunak. Under the Government’s plans, pensioners will receive an extra £300 winter fuel payment costing, while disabled people will get a £150 additional payment. Mr Sunak said the most vulnerable households would receive an extra £1,200. Defending the decision to introduce a windfall tax, the Chancellor insisted the Government had a responsibility to help those hardest hit by the cost-of-living crisis.
Windfall tax will extend to electricity firms within weeks
The windfall tax on North Sea oil and gas producers, announced by Chancellor Rishi Sunak on Thursday, will be extended to electricity generators within weeks, the Times reports. A government source said: “It’s called the energy profits levy for a reason… It’s a broad tax, we want to move sooner rather than later.” Although companies will get relief from the new tax if they plough their profits back into UK energy investments, the relief will be available only for companies investing in North Sea oil and gas, not green energy. Derek Leith, the global oil and gas tax leader at EY, said: “I’m gravely concerned that it will reduce the ability of these companies to invest in the energy transition. It seems to me counterproductive.”
Rishi Sunak’s support package a temporary salve for struggling families
The Telegraph reports that the Chancellor’s cost of living support package will offset less than a fifth of the cost increases middle-class families face this year. Increases in the cost of energy, mortgages, food and transport means middle-class households face bill increases of more than £3,500 this year, the paper’s analysis found. Sarah Coles of Hargreaves Lansdown warned that many families’ financial resilience would be completely exhausted by October as she questioned the logic of hiking taxes at this same. Nigel Morris, of tax firm MHA, said the Chancellor should have reversed the National Insurance rise and bring forward the Income Tax cut planned for 2024. “A more rapid rethink on taxes and business incentives is urgently required to prevent an impending recession,” he said. Elsewhere, the Guardian cites Greenpeace campaigners who say that by only levying a 25% tax on energy firm’s profits, the Chancellor missed an opportunity “to tackle the root cause of the cost of living crisis, and the climate crisis together.”
Two-thirds of British firms hit by fraud
According to a global survey by PwC, fraudsters have targeted two-thirds of British companies in the past two years, with cyberattacks the most common crime. In Britain, 64% of big corporations had been affected by fraud and other economic crimes over the period, 10% up on two years ago and significantly above the global average, which came in at 46%. However, the survey did find that reported incidents of bribery and corruption had fallen from 25% in 2020 to 10% while reports of accounting and financial statement fraud had also dipped from 26% of companies in 2020 to 10%. Just under a third (32%) of British companies said they had suffered cyber breaches, making cybercrime the most frequent economic crime, but the trend was down compared with 42% in the 2020 survey. The report’s authors also warned that companies were increasingly vulnerable to making fraudulent ESG claims as they rushed to improve their “environment, social and governance” credentials. Fran Marwood, a partner at PwC, said it was encouraging that “economic crimes have reduced due to the investment organisations have made in effective compliance programmes, cyber defences and fraud-prevention controls”.
Sanctions
The United States has rejected Russian President Vladimir Putin’s call for the West to lift its economic sanctions. According to the Kremlin, Putin told Italian Prime Minister Mario Draghi that Russia would release ships carrying food and fertilizer in order to ease a looming food crisis around the world, but only “on condition of the end of the politically motivated restrictions imposed by the West”.
Trade deal with Indiana
The UK signed its first trade agreement with a US state, Indiana. The Government expects to secure about six trade deals with US states by the end of the year. However a deal wit thw Federal government is hindered due to the way Brexit is being played and the deteriorating relations between the UK and the EU.
Missguided on the brink of collapse
Missguided has reportedly lined up administrators from insolvency specialists Teneo after being issued with a winding-up petition by creditors. The Telegraph reports that police were called to its head office in Manchester after angry suppliers turned up after being left millions of pounds out of pocket. According to court filings, a winding up petition was issued against Missguided on May 10 by Manchester-based supplier JSK Fashions. Alteri Investors, which saved Missguided from collapse last autumn, has been attempting to offload the company over the last few weeks, with JD Sports and Chinese-backed rival Shein linked with making a bid. Three factory owners also told the i that they are also at risk of going bankrupt after Missguided failed to pay them for clothing. A spokesman for Missguided said: “Missguided is aware of the action being taken by certain creditors of the company in recent days, and is working urgently to address this. A process to identify a buyer with the required resources and platform for the business commenced in April and we expect to provide an update on progress of that process in the near future.”
Derby County takeover on verge of completion
The takeover of Derby County by American businessman Chris Kirchner is finally on the verge of being completed after a local Derbyshire businessman agreed to buy Pride Park stadium from former chairman Mel Morris and lease it to Mr Kirchner. Kirchner was named as preferred bidder on April 6th by administrators Quantuma. His purchase of the club is now expected to go through by Tuesday at the latest.
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
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
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.