One in four UK SME’s facing cash flow crisis – business news 7 June 2021.

James Salmon, Operations Director.

One in Four UK SME’s facing cash flow crisis. Outstanding tax rockets to £15bn. G7 reach deal to stop global corporate tax avoidance, Britain attracts most new FDI projects, Confidence surges to 7-year high, Workers return to offices as restrictions ease and more.

One in Four UK SME’s facing cash flow crisis

Research issued in the past week from card payments specialist Take Payments found that more than one in four UK small businesses are facing a cash flow crisis and this is their greatest financial concern they are currently facing. Not only has this been driven by the economic collapse caused by Covid-19. but they are frequently chasing late payments.

This research has highlighted the ongoing struggle many businesses are facing in managing cashflow and key to that is late payments. SMEs are particularly vulnerable and have been significantly impacted by the cash flow crisis, subject to extended payment terms by big corporations

SMe’s are often left with little choice but to carry on and work with businesses deemed bad payers, often to their own detriment.

CPA has been helping SME’s gain the upper-hand against late payers for years. Ask us how we can help you overcome a cash flow crisis.

Outstanding tax rockets to £15bn

Data from HMRC show how thousands of individuals and businesses are struggling financially as a result of the pandemic and the amount of tax owed by those having difficulty paying went up more than 750% in the first three months of the year, with tax outstanding jumping from a trend of £2bn over the past five years to £15.1bn between January and March. The number of people who have applied for a Time to Pay (TTP) arrangement with HMRC increased from 665,156 in the last three months of 2020 to 864,397.

G7 reach deal to stop global corporate tax avoidance

Finance ministers from the G7 group of advanced economies have reached a deal to make multinational companies pay more tax. The agreement will mean the world’s largest companies are forced to pay a global minimum tax of at least 15% in a bid to stop firms from shifting their profits to havens around the world. The new rules will affect companies with profit margins over 10% and ensure companies pay tax in countries where they operate and not just where they have headquarters.

It will mean that 20% of any profit above the 10% margin will be reallocated and then subjected to tax in the countries where they make sales. Governments could still set whatever local corporate tax rate they want, but if companies pay lower rates in a particular country, their home governments could “top-up” their taxes to the minimum rate, eliminating the advantage of shifting profits.

UK chancellor Rishi Sunak hailed the deal as “a historic agreement to reform the global tax system.” Janet Yellen, US treasury secretary, said the agreement was a “significant, unprecedented commitment” that would “ensure fairness for the middle class and working people in the US and around the world.” If a global accord is struck at the G20 in Venice in July a century of international corporate taxation – where profits are taxed only where companies have a physical presence – will be overturned.

Still to be agreed is the definition of “the largest global companies” and when exactly the UK, France and Italy will cease their Digital Services Taxes. The European countries have insisted they would abolish these taxes once any global agreement had been sealed and ratified. John Cullinane, public policy director at the Chartered Institute of Taxation, said the prospects of reform were now “more optimistic than before” but there was some way to go with negotiations in the OECD and the larger G20 group of nations still to come.

Britain attracts most new FDI projects

Britain expanded its market share of foreign direct investment for the second year running last year closing the gap on France, which took the crown from Britain in 2019. During 2020 the UK secured 975 inward investment projects compared with France’s 985 projects, according to EY. This was down by 12% on 2019, but was smaller than the 13% decline registered in the rest of Europe. France registered an 18% drop and Germany, which ranked third, fell by 4% to 930.

EY noted that Britain had attracted the most new projects of any European country, rather than relying on reinvestments. “The UK has demonstrated resilience and adaptability in attracting investment. However, its former dominance of the FDI market has been replaced by a competitive three-way tussle with Germany and France,” the report said. Additionally, EY said Scotland had “bolstered its position as the UK’s most attractive FDI location outside London” last year, accounting for 11% of projects, up from 9% in 2019.

Confidence surges to 7-year high

Business confidence hit a seven-year high last month, fuelled by the successful vaccine rollout and a return to indoor trading for the services sector. BDO’s optimism index jumped from a score of 99.85 in April to 109.71 in May, significantly above the long-term average of 100. Kaley Crossthwaite, a partner at BDO, commented: “While this is a much-needed dose of positive news as we head into the summer, rising inflation serves as a sobering reminder of the challenges that remain on the horizon.”

Workers return to offices as restrictions ease

New data from IWG show visits to UK city centres are up 58% since January as thousands of workers return to offices across the country. IWG, which operates office and flexible working space, saw an 11% increase in employees visiting an IWG space month-on-month from January until April, and a further 15% from April to May.

CEO Mark Dixon said: “We are seeing in real time more and more people returning to our spaces, not only in the UK, but across the more than a hundred countries in which we operate.” He added: “The growing popularity of hybrid working amongst employees and businesses means workers now have the freedom and flexibility to choose a location to work from which suits their lifestyle.”

Challenges ahead as Britain bursts free of lockdown

Liam Halligan writes in the Telegraph on the challenges facing the UK economy should Boris Johnson lift the final restrictions on Britain on June 21st, as planned. Although figures already indicate rapid expansion in manufacturing and construction output, for example, over a tenth of the workforce is still on furlough with many of those workers facing unemployment when support is withdrawn. Then there is inflation, observed in higher fuel, food and wage costs to contend with.

Despite this, Halligan is optimistic Johnson will not bow to the “doom boffins” who are evidently determined lockdown continues and the Prime Minister instead favours “other scientists, as well as economists and business and community leaders who say enough is enough.”

First Homes initiative

The UK government has unveiled a “First Homes” initiative aimed at first time buyers where the homes are designated for key workers such as NHS staff, delivery drivers and supermarket staff, who will be incentivized by discounts of at least 30%. The scheme will not be available for households with a combined annual income of over £80,000 or £90,000 in London.

PM and chancellor to meet with financial services chiefs

Boris Johnson and Rishi Sunak are to hold talks with City bosses today to discuss how best to maintain the global competitiveness of Britain’s financial services industry and its role in supporting the UK’s economic recovery from the COVID-19 crisis. Andrew Bailey, the Bank of England governor, is also expected to attend alongside the CEOs of Aviva, Nationwide, HSBC, Legal & General and others.

Trade deals

The United Kingdom has signed a post-Brexit trade deal with Norway, Iceland and Liechtenstein, the govt has announced. The agreement will be a major boost for trade between the four non-EU nations, which is already worth £21.6bn, Liz Truss said.


UK Construction Activity surged in May at the fastest rate in nearly seven years, fueled by a record increase in new orders as covid-19 lockdown measures lifted, a survey showed on Friday. Construction PMI jumped to 64.2 from 61.6 in April, its highest level since Sept ’14.

Despite severe challenges with materials availability, construction firms remain highly upbeat about their near-term growth prospect,” said Tim Moore, economics director at survey compiler IHS Markit.

Jan Crosby, KPMG’s UK head of infrastructure, building and construction, said the growth spurt in part reflects surging house prices. He said: “With the stamp duty holiday ending soon, house prices remain high, which means the pressure is on to build more residential projects and new housing developments, and the sector is more than responding.”

Car sales accelerate in May

Data from the Society of Motor Manufacturers and Traders show car sales in May jumped eightfold on the same month last year to 156,737 vehicles, following this year’s first full month of showroom openings. However, they were still 13.2% down on the 10-year average for May.

Chief executive Mike Hawes said demand for electrified vehicles is encouraging people into showrooms and sales were “as good as could reasonably be expected” but the post-Covid recovery still has a long way to go.

Richard Peberdy, automotive lead at KPMG, said that there were signs that the sector was “ripe for recovery” in the long run. “The average age of vehicles on our roads is at a record high, suggesting many drivers will be looking to switch soon, and inventory shortages in the used-vehicle market should push motorists towards new models. The picture is particularly encouraging for future plug-in sales, with an increasing supply of attractive electric and hybrid options for consumers to choose from”, he added.

US jobs

In a boost to the global economy, America created nearly 560,000 new jobs in May—slightly fewer than some economists had predicted but a significant improvement on the 278,000 jobs added in April. Unemployment fell below 6% for the first time since the start of the pandemic, to 5.8%.

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 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

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.