Coronavirus and business.

17th March 2020.

James Salmon, Operations Director.

The last few days have been a very testing time for most small businesses. Their normal activity has been disrupted, employees and customers are staying away  out of fear of falling ill and business owners are worrying about their cash flow and meeting the payroll.

As with human victims of the virus, those companies most at risk will be the ones with a pre-existing condition. Firms with large borrowings or heavy cash losses will be the first to fall. No doubt the banks will be selective in deciding which of their clients to support.

Costs are already being slashed. Suppliers are being made to wait longer for payments.

Unfortunately, on top of the human tragedy, many zombie companies and those who were already struggling will fail. Even some healthy businesses in the leisure and travel industries will not have the strength to survive this.

We will see a rise in  bad debts. Perhaps only the insolvency practitioners will thrive.

Certain industries are much more exposed than others. Anyone exposed to  airlines, hotels, exhibitions and conferences, cinemas, theatres, restaurants, casinos, cruise lines, oil and gas, tour operators and travel agents will be worried.

What can you as an small business owner do, other than encourage staff and customers to wash their hands?

Shutting up shop isn’t an option for sectors such as leisure, hospitality or entertainment – unless you want to guarantee insolvency.

What about businesses reliant on importing  parts or finished goods from China that have just seen the pipe of imports  switched off?

Office staff can often work from home but for most companies that is not an option.

With fear running  rampant, how long before we see a return to the norm?

Trust is in short supply currently as staff and customers shy away from public places and  transport.

Restoring confidence in normal human relations will take a little time, although at heart we are social animals who crave person-to-person contact.

Hopefully the governments and central banks can provide the necessary support till the crisis peak has passed and normality returned.

But with people not buying and businesses not selling, cheap credit and fiscal support can only go so far.

Those who went through 1987 and 2008  know that business is cyclical, and that this too will pass.

Meanwhile now is the time to watch that cash flow.

Chase up payments promptly. Don’t over extend on credit.

CPA can help it’s members.

Our Late payment compensation service can help you too find a cash boost from business customers who paid you late in the past.

But on the reverse – don’t be too short-termist by holding back payments from your suppliers. If they get into difficulties that can be just as harmful to you in the future.

We need to keep cash flowing through the economy. If everyone just turns off the taps then the damage will be far worse.

We must do what we can to survive – we need to show resilience and provide energy to succeed.

Once the crisis is over, small business owners and companies that didn’t roll over but survived will be stronger and better equipped to grow and thrive.

This crisis may be a new one, but it will pass and the world will eventually move on.

Make sure you and your business

Coronavirus: Recession predicted for UK

City analysts are now predicting a recession in the UK as the coronavirus plays havoc with the economy.

Paul Dales at Capital Economics predicts a fall in UK GDP of around 2.5% in the second quarter, forcing the Bank of England to cut interest rates to new lows of 0.1% and to ramp up quantitative easing.

Elsewhere, Odey Asset Management said: “The evidence from Chinese infection rates, market signals and recovering rates of economic activity is that the lockdown strategy is the correct approach to this crisis. This evidence flatly contradicts the non-interventionist approach of countries such as the UK.”

Coronavirus may trigger global recession

Economists have warned that the coronavirus outbreak means a global recession is likely.

Christian Keller, head of economics research at Barclays, said: “Europe looks to be fully affected by the virus and, increasingly likely, also the US,” adding that “significant restrictions to public life … imply large negative effects on activity in the second quarter.”

Barclays predicts global growth of just 1.8% this year, while BMO Capital Markets thinks the global economy will grow by 1.6%.

Peter Berezin, chief global strategist at BCA Research, believes a global recession is almost inevitable, suggesting the only question is whether it will be a “prolonged downturn that produces a sizeable increase in unemployment rates”.

George Buckley, chief European economist at Nomura, comments: “This is precisely the situation that we have been worried about for the past decade – another crisis, another recession and no monetary bullets left.”

BoE will take ‘prompt action’ on coronavirus

The Bank of England (BoE) will take “prompt action” when necessary to tackle the economic impact of coronavirus, says new Bank of England governor Andrew Bailey.

His words raise the prospect of another interest rate cut, City AM notes. Mr Bailey, speaking for the first time as governor after replacing Mark Carney, noted the “strong coordination among central banks” around the world in dealing with the crisis.

He told the BBC the BoE is “very keen” to avoid long-term damage to the UK economy. “That’s why you saw prompt action last week, that’s why you will see prompt action again when we need to take it, and the public can be assured of that,” he added.

Virus set to hit GDP growth – BCC

The British Chambers of Commerce (BCC) has downgraded its UK GDP growth expectations for 2020 to 0.8%.

The figure would mark the weakest full-year growth since 1992, excluding the 2008/09 financial crisis, and is a marked dip on 2019’s 1.4% GDP growth.

The BCC’s head of economics, Suren Thiru, said: “It is increasingly likely that the boost from higher Government spending and more political certainty will be surpassed over the near-term by the negative impact of coronavirus on the UK economy”.

BCC director general Adam Marshall added: “Coronavirus could further weaken an already stagnant UK economy, as many businesses are starting to report an impact on their cashflow and growth prospects”.

UK economy faces ravaging from Covid-19

Independent economist Julian Jessop fears the UK economy could contract by 6% or more in just one quarter due to the impact of the coronavirus shutdown.

His prediction comes as retailers prepare to ask the Treasury to defer all business rates and the hospitality industry warns that the sector will run out of cash in 8-10 weeks.

Mr Jessop warned that a plague of bankruptcies of previously healthy companies would make a recovery next year harder. The fall in GDP would be steeper than in the financial crisis.

The Sunday Times talks to forecasters with less dramatic predictions but they still see a global recession ahead. Restructuring experts predict that the coronavirus will kill off “zombie” companies that had struggled for years despite the low-interest-rate environment.

Matt Dunham at R3 tells the Sunday Express’ Geoff Ho: “There are lots of over borrowed businesses and companies which have been s truggling on because conditions have been benign… There is going to be one hell of a shock.”

Cash concern as virus threat grows

The Guardian warns that financial markets “face another volatile week as the escalating coronavirus crisis tips the global economy into a downturn that some companies will struggle to survive”.

The paper cites Karim Haji, the head of financial services at KPMG, who says: “We cannot underplay the challenge at hand here. A huge proportion of UK businesses face significant cashflow pressures and without cash firms can’t survive for long”.

Cash key for small businesses now

The Sunday Times looks at the pressures facing small businesses as the Covid-19 crisis escalates and orders fall away.

Cash flow problems are already being felt with a survey by MarketFinance last week finding 69% of small companies were facing “significant pressures” on their cash levels because of the outbreak.

Anil Stocker, MarketFinance chief executive, said: “If you’re in a finance team, you need to be thinking of creative ways to get cash into the business.”

BoE has missed a huge opportunity to fund SMEs

Stephen Haddrill, the DG of the Finance & Leasing Association, says the BoE should extend its term funding scheme to non-bank lenders, which provide SMEs with up to £20bn a year of finance.

Banks concerned over SME loan scheme

Banks have voiced concern over a £1bn loan scheme designed to help small businesses cope with the coronavirus outbreak.

Chancellor Rishi Sunak last week outlined plans to help banks to make short-term loans to businesses, with 80% of the loans underwritten with public money.

However, questions have been raised about how long the scheme, which will be administered by the state-owned British Business Bank, will take to roll out, with other concerns centred on the size and complexity of the initiative.

Stephen Jones, chief executive of UK Finance, said: “The impact of Covid-19 is already starting to be felt by small and medium-sized businesses around the country, so it’s essential that we get this scheme up and running within days and that it is simple to access.”

Call for overdraft interest hikes to be halted

Campaigners are calling on banks and building societies to delay imposing new overdraft rates on customers due to the coronavirus outbreak.

Bank of Scotland, Halifax and Lloyds account holders will be charged up to 50% in interest but Baroness Altmann, a former pensions minister, said that increasing interest rates was “impossible to justify” in the current climate.

“Banks should reconsider the rise in overdraft charges that is due to come in shortly,” she said.

Big companies must complement government support for SMEs

The British Chambers of Commerce, the ICAEW, the Institute of Directors, the Federation of Small Businesses (FSB) and Enterprise Nation are among groups calling on big companies to speed up supplier payments to ease the cash crisis engulfing small firms.

Philip King, the government’s small business commissioner, will set out proposals backed by the lobby groups asking that money is paid to suppliers as soon as an invoice is approved.

“In past downturns, late payments have increased. To do this now would send many smaller companies to the wall,” said Craig Beaumont, a director at the FSB. “Large firms should play their part and pay quickly.”

Morrisons to pay small suppliers straight away

Morrisons is to pay its small suppliers immediately to help keep them afloat amid coronavirus uncertainty.

Morrisons is the first major UK supermarket to make such a change to its payment terms.

Morrisons said that it had reclassified 1,000 suppliers to include them in the policy, meaning that 3,000 small businesses, including 1,750 farmers, would benefit.

Government urged to extend rate relief

Trade bodies are calling on ministers to extend the extension of business rates relief due to concerns over the impact the coronavirus outbreak could have. While the Budget last week saw retail, leisure and hospitality firms operating premises with a rateable value of less than £51,000 granted a rates holiday, the Government is being urged to extend the measure to firms of all sizes. Adam Marshall, director general of the British Chambers of Commerce, said: “It’s a crucial moment in time because companies have a liability to pay those rates unless the Government takes action to either give a holiday of some sort or some additional relief,” while Mike Cherry, chairman of the Federation of Small Businesses, added: “The Chancellor said the door was open for more support and it looks like this may be needed for businesses that fell outside the promises made in the Budget.” Mr Cherry added that many of the UK’s 4.8m self-employed “are concerned about their livelihoods if they are forced to self-isolate and are unable to earn or if they have contracts cancelled as a consequence of the outbreak. Many will feel like they are being made to choose between their health and wealth.”

Commute and sickness brings productivity slump

A survey by accountancy group Theta Financial Reporting has revealed that almost 40% of Britons are not as productive as they could be at work due to “presenteeism” – when people go to work despite being ill.

Theta also found that 37% were exhausted by their daily commute to work.

Staff set to stay home

The Sun says millions of workers will remain at home, with a number set to work remotely on the back of coronavirus fears. It notes that Deloitte is among London firms to have activated contingency plans that will see staff working from back-up locations and from home.

Tax tips for those forced to work from home

The Sunday Times provides some tax tips for those forced to work from home because of the coronavirus outbreak.

The paper’s David Byers informs readers that even those who are an employee rather than self-employed can also make claims from their employer or HMRC for a variety of costs and any equipment used. An increase in energy bills can be claimed for and phone calls should be claimed back on expenses.

The cost of equipment such as a desk chair can be claimed from HMRC, along with computers, printers and other office furniture and stationery using a P87 form.

But Tim Stovold, a partner at Moore Kingston Smith, said claimants must be able to prove the equipment was “wholly, exclusively and necessarily” for the purpose of work.

Matthew Brown, a technical officer with the Chartered Institute of Taxation, also provides advice.

Coronavirus could hit home values

Property experts have warned that there is uncertainty over how the coronavirus outbreak will affect the property market.

Rightmove director Miles Shipside suggests that the “current fast pace of the housing market could now be affected,” although he notes that there has yet to be a drop in buyer activity or interest in the housing market.

Rightmove figures show that the average UK house price grew 3.5% to £312,625 in February.

Estate agents fear how virus could hit housing market

A steep drop in property viewings has put thousands of estate agents at risk as coronavirus threatens to choke the housing market recovery, according to industry warnings this weekend.

Mark Hayward, managing director of the National Association of Estate Agents, said: “Cash-flow is critical. If [estate agents] have been experiencing a tough time, and times toughen even further, there may well be some casualties.”

Manufacturing exports fall

A report from Make UK and BDO shows manufacturing exports fell to the lowest level in three years in Q1, with export orders turning negative for the first time since 2016.

A poll of more than 300 companies also suggests the sector ground to a standstill at the end of 2019 as the stockpiles from a potential October EU exit wound down.

Tom Lawton, BDO’s head of manufacturing, said that with the potential impact of the coronavirus on supply chains largely unknown, “businesses should be preparing themselves for more volatility”.

He added: “There is no doubt that the sector needs the Government to step up and deliver a clear and supportive industrial strategy to help navigate the choppy waters ahead.”

Airlines call for government support

The airline industry is reeling from the effects of travel bans put in place to combat the spread of Covid-19. British Airways has warned staff that the carrier will have to cut jobs, suspend routes and ground aircraft and Virgin Atlantic, easyJet and Ryanair are all expected to announce mass groundings of aircraft and potentially huge redundancies.

Peter Norris, the chairman of Virgin Group, has written to Boris Johnson stating that the industry will need £7.5bn in emergency financing, to be repaid once trading returns to more normal levels.

Meanwhile, trade group Airlines UK has warned that the UK’s aviation industry may not survive the coronavirus pandemic without emergency financial support. Governments across Europe have had similar requests from the industry, which doesn’t expect to be able to stage a recovery until the autumn.

Government could bail out airlines

Transport Secretary Grant Shapps has said that the Government is considering bailing out airlines, averting the possible collapse of major carriers such as Virgin Atlantic and easyJet.

The pair have said state aid will be needed to prevent them collapsing over coronavirus.

Mr Shapps told Sky News: “We want to make sure that companies and individuals and organisations who are in a good state – not those that are going to fail anyway – are able to continue. We’ll be looking at all of these measures… and those discussions with the sector are ongoing

Laura Ashley on the brink

Laura Ashley is in talks with Hilco Capital over a £15m funding lifeline that could salvage 2,700 jobs.

Failure to secure funding could see the chain collapse within two weeks leading to the closure of 150 stores.

In a statement on Friday, Laura Ashley said: “Whilst the company has not yet seen a significant financial impact due to Covid-19, the company believes that it has the potential to negatively influence future trading as a result of reduced footfall and continues to monitor the situation closely.”

Next expected to cut profit targets by £66m

Next is expected to cut profits targets in an update on Thursday, as a combination of the coronavirus, a hike in wages from April and currency headwind piles pressure on struggling high streets.

Next said in January that it expected to make pre-tax profits of £734m for the current year. However, analysts believe that this could now fall by 9%, or £66m. In a worst-case scenario it may fall by as much as 15%.

Auditors red-flag Interserve’s finances

The future of Interserve, one of Britain’s biggest outsourcers, has been cast into doubt after auditors red-flagged its finances in accounts which were signed off last month only after directors secured a £125m cash injection from lenders.

Do you sell on credit?

With pressures on the cash flow it is essential that you stay on top of the credit limits you grant customers and watch carefully for any late payments.

Those customers will look for the easiest option  to boost their cash-flow. Don’t let it be you.

You can’t just assume your customers can and will pay you eventually, no matter how big their name is.

It is essential to have credit management systems in place to monitor and check your customers credit worthiness.

It is also best practice to use a trusted third party like CPA to make sure you are paid on time by customers, no matter how good a name they have.

About CPA

The Credit Protection Association can help!

Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.

At the Credit Protection Association, we provide first class credit information that can help you avoid being over extended to customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.

We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.

Companies in trouble usually have very bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.

If you supply on credit, help us help you identify the risks.

Why use a third party collector?

As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When your customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.

Over the years we have collected billions in overdue invoices for our customers.

Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.

You might be hesitant about contacting a debt collection agency. What are they going to be like?

Can they help your particular type of business?

There is no need for concern. CPA are courteous, helpful and very probably have had direct experience of working with your type of business.

Debt collection agencies are not all alike.

Success lies in both recovering money and keeping customers happy. The Credit Protection Association was founded in 1914 and  has helped tens of thousands of UK businesses to collect outstanding payments and reduce the risk of incurring bad debt. We believe that creditors deserve to be paid for the work or goods they have supplied but we fully understand the need to maintain
the best possible relationship with customers!

At The Credit Protection Association, we provide solutions, advice and back-up in all areas relating to the supply of services or goods on account. Client-members receive everything they need from a single source to reduce debtor days and write-offs.

The Credit Protection Association has helped has assisted tens of thousands of UK businesses with their credit control requirements, since the First World War.

We are polite, firm and efficient when it comes to recovering outstanding debt.

“We have used CPA for a number of years now. The website is easy to navigate around with lots of helpful reports. The staff are always at hand and very friendly. CPA has  helped us reduce our debt over the years and keep track of potential issues with our customers.”
~ CPA client in Buckinghamshire

“The service from CPA has proved to be everything that you said it would be. We have already seen a huge benefit. We have had a number of overdue accounts paid promptly and directly to us. It is also a huge weight off our mind to know that once we have passed an overdue payment over to you, you take care of everything whilst keeping us informed.
~ Credit Controller client in Warrington

The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections


Ready to speak to an advisor?

For help or advice on credit management, entirely without obligation.

Call us today

0330 053 9263

CPA is passionate about late payment

The Credit Protection Association has been protecting smaller firms against poor payment practices for over 100 years.

We are extremely passionate about breaking the late payment culture that holds back the UK economy and threatens many SMEs with cash flow difficulties being the single biggest killer of Britain’s small businesses.

If you were regularly paid late we can help. Those former customers used you to boost their own cashflow, regularly paying you late.

As a result you had extra costs, you had the distraction of having to chase payment, you had opportunity costs because your capital was tied up in their late invoices.

Under little used legislation, you are entitled to compensation for those late payments.

Now you can boost your own cash-flow.

CPA can help unearth the those hidden treasures.

We have the technology to reveal the compensation you are due and we have the extensive experience and expertise to then turn those claims into cash.

Yes, CPA can help you boost your business cash-flow.

Don’t let your bankers control you, contact CPA today.

The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections

Read our blog here on how to crack down on the late payment culture.

Read our blog here on how to give late payers the slap they need.

The “Why” of the late payment culture.

New PM should walk the walk and back small firms over late payments

Paying late is “crack cocaine” to big business.

Late payment culture risks “spiraling out of control”

visit our late payment compensation page

See our full blog and FAQ on late payment compensation

Do you realise you could be sitting on a fortune?

Late payments often result in a cash flow crunch and leave SMEs in need of a cash injection.

If you sold B2B on credit then there may be a hidden source of capital you can call on.

If you fancy an bit of extra cash in your business, rather than jumping through hoops with your bank, you could look to uncover the resources from an unexpected source within your own business.

Not many are aware but there could be a hidden fortune within your business, sitting there, just waiting to be uncovered and released.

We can help you uncover the pile of gold, you didn’t even know you were sitting on.

If you trade with other businesses and were often paid late then you could be entitled to significant compensation.

Under little known and under-utilised legislation your business could be due huge amounts in compensation that you didn’t even know about.

Let’s be clear – this is not a way to weaken any customer relationships you value. It is one that identifies who’s been paying late and then recover the potentially significant sums in compensation using Late Payment Legislation from businesses where the relationship has already ended.

You can pick and choose who you want us to follow up – but once we’ve agreed which companies you’d like to pursue compensation from it’s a fast process and there’s no financial outlay to you whatsoever. My team at CPA put its expertise to work to recover the compensation due and fight late payment culture.

That compensation could provide the cash boost your business needed.

But don’t delay, that compensation evaporates if not claimed within six years of the late payment.

How can CPA help?

CPA has developed a unique technology to dig into your accounting records and discover the cash injection you are due by means of compensation. The software does all the hard work. Our software interacts over the cloud with over 300 different software packages, working directly with your accounts package, just so long as it’s stored on a computer.

We recognise that most companies do not have the resources to spend time on the identification and calculation of Late Payment Compensation. Our service can produce an Analyses within just a few days with (usually) less than 30 mins of co-operation from our clients. We work directly with over 300 accounting packages but can also work with bespoke accounts packages. Indeed, speed is essential as the oldest invoices may fall foul of the 6-year time limit.

Once the Sales Ledger Analyses is made available to clients, all that is required is that management decide which commercially sensitive ex-customers to remove from the list and return it to us.

CPA then uses its years of collection experience to explain and recover the Late Payment Compensation Claims. Clients do not handle any part of the recovery process as our team will take all communications from the companies against who the claims has been made. Often, it’s simply a case of explaining the legislation, sometimes we have to go all the way and enforce the legislation through the courts.

The result is that we are realising clients’ claims worth tens and sometimes hundreds of thousands of pounds which, of course, is pure net profit.  You may also be among the recipients of “hundreds of thousands of pounds” should you elect to take advantage of our services.

We do the work, you receive the cash.

If you have supplied goods and services to businesses on credit and were regularly paid late then you could be due significant sums in late payment compensation.

We are talking to companies and unearthing claims in the hundreds of thousands from former business customers who paid them late. Large business customers who abused their power to inflict unfair and sometimes illegal payment practices.

We are helping business owners  who are looking to boost the returns from their business before they retire. We are helping businesses who have lost major clients after years of loyal service to get properly compensated for systematic late payment. We are helping companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.

Those former clients who regularly paid you late can finally be made to pay.

Ready to speak to an advisor?

For help or advice on credit management, entirely without obligation.

Call us today

0330 053 9263

The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!

The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections

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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections