93 Percent of businesses experience late payments – Business news 28 January 2022
James Salmon, Operations Director.
93 Percent of businesses experience late payments. SME’s don’t need high taxes. Half of small energy suppliers at risk of collapse. UK car production recovery. WFH tax loophole to be closed. And more business news.
93 Percent of businesses experience late payments
More than nine in ten of businesses (93 percent) experience late payments and are currently waiting on payments that are late in arriving from customers, according to new research.
For medium sized businesses with between 50 to 249 staff, those waiting on late payments rises further to 94 per cent.
Late payments and the resultant cash flow problems can negatively impact a business’ ability to trade optimally. They may be prevented from investing in their business, employing more staff or even getting taking on further work.
The late payment culture is nothing new, but 40 percent of SMEs report that late payments have become more common following the pandemic.
Failure to make payments on time is the leading cause of business failure. Businesses that pay late are threatening their own supply chain. Businesses who spread late payments in domino effect, paying late because they’ve been paid late are perpetuating the late payment culture. A united front is needed for businesses doing all they can to pay their suppliers on time to stop that domino effect. if you are concerned about late payments then you need to take action by implementing an end-to-end credit management process.
According to research, the UK’s late payment ‘crisis’ risks the future of 440,000 small firms whilst further studies conducted by the Federation of Small Businesses (FSB) highlighted that one in three (33 percent) of Scottish business owners say that late payments increased in the last three months of 2021.
SMEs are particularly vulnerable and have been significantly impacted by the crisis, subject to extended payment terms by big business. But most late payments are late payments between small businesses!
Unfortunately most small businesses have no choice but to continue working with customers who have already demonstrated themselves to be bad payers.
To avoid organisations perpetuating this vicious late payment cycle talk to CPA about our Credit management tools and our late payment compensation service which hits late payers in the wallet.
Mike Cherry: SME’s don’t need high taxes
City AM interviews Federation of Small Businesses chairman Mike Cherry, who reiterates his call for the proposed rise in National Insurance to be delayed. Mr Cherry fears the decision to launch plan B restrictions just before the bumper Christmas trading period, compounded by higher tax bills, will push some small businesses over the edge.
“It is highly likely some businesses will take the decision we’re either going to cease trading or we’re going to fold” as a result of lost Christmas income and the NIC hike, Cherry warned. “Rising energy costs are going to have a negative impact on small businesses who don’t get the same level of protection as consumers,” he added, before warning that any rise in costs has “a massive impact when most small businesses are operating on wafer thin margins.”
Mr Cherry also said the culture of paying small businesses late needs to be addressed. He recommended the Government tell “the audit committees at large corporates to be responsible for making sure the supply chain is functioning fairly”.
Half of Britain’s small energy suppliers at risk of collapse
Over half of Britain’s remaining small energy suppliers are at imminent risk of collapse, according to Price Bailey. Of the 22 gas and electricity suppliers left outside of the so-called “big six”, 12 have negative assets on their balance sheets meaning they are technically insolvent and at risk of collapse. Price Bailey’s Matt Howard said: “The winter of discontent for the energy supply sector is unlikely to end soon. These businesses will find it almost impossible to access extra funding unless directors provide personal guarantees, and few are likely to do so.” Mr Howard added: “Every time a small energy retailer goes bust, that increases the financial strain on the rest of the ecosystem, making those businesses more vulnerable. The business models of many of the small suppliers are not sustainable in an era of rising wholesale prices. Many of are failing because they did not buy energy in advance.”
SMMT forecasts UK car production recovery after “dismal” 2021
The latest figures from the Society of Motor Manufacturers and Traders (SMMT) have revealed that 859,575 cars came from UK factories last year, a 6.7% decline from 2020 and a 34% drop on pre-pandemic 2019. The SMMT lists the ongoing semiconductor shortage as the principal cause of the “dismal” performance. SMMT chief executive Mike Hawes said that while “the semiconductor issue is going to be tough in the first half of the year, it will ease and that should flow through to production output”.
WFH tax loophole to be closed
HMRC is reviewing the tax relief scheme for home workers after officials warned Rishi Sunak that it had cost the Treasury nearly £500m during the pandemic – up from about £2m the year before. Rules around the relief were relaxed during the pandemic and the tax-free amount people could claim for costs associated with working from home were raised from £4 a week to £6. Workers were also told they could claim the full yearly sum – even if they had been told to work from home for a single day during the tax year. HMRC is now compiling a report for the Chancellor, which is expected to lead to changes to who is eligible for the tax relief and how much can be claimed. A Treasury source said: “This is a tax relief that existed before Covid and it was there for legitimate reasons, but the take-up is now much higher, so it needs to be looked at.”
Chancellor accused of stalling on Northern Ireland Protocol progress
Rishi Sunak has been accused of blocking plans to invoke Article 16 of the Northern Ireland Protocol, with an ally of Boris Johnson claiming the Chancellor was a “nominal Brexiteer and completely captured by the Treasury.” Mr Sunak has fought to stop any action that would “upset the EU on trade” and so has hampered negotiations. A spokesman for the Chancellor refuted the claims, which come amid heightened tension over the impending rise in National Insurance Contributions.
Tory MPs are briefing against the Chancellor who has tried to distance himself from the policy by calling it the PM’s tax. Sunak is also the 6/4 favourite to replace Mr Johnson if there is a leadership contest. The infighting has worsened after Mr Johnson was warned he would face his own “Black Wednesday” if he pressed ahead with the NICs rise, which will cost the average worker an extra £255 a year.
NICs rise now central to Johnson’s survival
Despite Boris Johnson insisting that the planned rise in National Insurance is essential to fund the NHS, the PM has again failed to confirm that the rise is going ahead in April. Mr Johnson has come under intense pressure to scrap the tax hike with a campaign from backbenchers reportedly pitting the policy against his future as the scandal over lockdown parties in Downing Street threatens to derail his premiership. The Guardian reports that the Treasury is becoming increasingly alarmed at the prospect of Johnson cancelling the tax rise if he thinks his future depends on it. If Johnson goes ahead and overrules the Chancellor sources tell the paper it could make Rishi Sunak’s position untenable. Meanwhile, Mel Stride, the Conservative chairman of the Treasury select committee, has said he favours the hike being delayed for a year. He argues that the Treasury has £13bn more in its coffers than expected and so can afford to postpone. Stride and other Tory MPs argue the hike is the wrong policy when people are facing soaring living costs and that it amounts to “an inflationary measure in itself and that would have knock-on consequences for the servicing costs of the national debt.” Separately, Business Secretary Kwasi Kwarteng insisted there would be “no U-turn” on the tax claiming the Government was “totally committed to funding the NHS, clearing the backlog of the NHS, and also funding social care.”
The US Economy
The US Economy is powering faster than Wall Street can keep up with as the recovery continues to gather momentum. Stateside GDP growth came in at 6.9% in the final three months of last year, the US Commerce Department said today. Experts had been pencilling in 5.5% expansion. The US central bank as separately signaled rate rises ahead.
Apple
Apple released estimate beating numbers yesterday as it beat the supply chain crunch and benefited from the update to its phones, watches and macs. It is now the best sold handset in China.
Dr. Martens
Dr. Martens reported that revenue in third quarter revenue was up 11%, led by growth in its direct to consumer business.For the three months ended 31 December 2021, revenue was up 11% to £307 million year-on-year.
Square Mile outperforms New York and Paris
A new report by the City of London Corporation reveals that London has retained its crown as the world’s top destination for financial and professional services. The Square Mile outperformed other major financial hubs, including New York, Singapore and Paris, with “unmatched international financial reach”. The City excelled as a hub for tech and innovation remained Europe’s leading destination for investment in financial services. It was also the world’s leading foreign exchange trading centre. However, London trailed Singapore, Hong Kong and Japan in terms of skills and lost out to rival hubs in terms of attracting companies to float on its stock market. Catherine McGuinness of the City of London Corporation said: “To remain globally competitive, we must future-proof the sector by improving digital skills and infrastructure. Our tax rates must remain globally competitive and, crucially, we need to remain open – and be seen to be open – to the very best talent from across the globe.”
Sunak working hard to make the City more competitive
The next Queen’s Speech will feature an overhaul of financial services regulation, sources told City AM, while a consultation on the Treasury’s Future Regulatory Framework (FRF) Review is set to be wound up in early February. The package of measures will include an easing of capital requirements for the insurance industry and changes to share-listing rules. A Treasury source said Sunak’s push for a regulatory overhaul shows he is “capturing the mood and that he’s on top of these things…at a time when there needs to be potential Brexit dividends”. Andrew Pilgrim, EY’s government and financial Services leader, said any easing of capital requirements for financial firms would be a huge win for the City. He said: “What sort of tailoring can you do to UK capital requirements to get more investment into infrastructure, the green transition, digitisation of the economy and levelling up of the UK regions? That, for me, feels like where the focus needs to be and where it currently is.”
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
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.