Coronavirus business news update 1st April 2020.
1st April 2020.
James Salmon, Operations Director.
SMEs pushed toward more expensive loans
The Federation of Small Businesses has warned that some lenders are pushing SMEs seeking to get interest-free loans offered as part of the Chancellor’s COVID-19 support package toward more expensive alternatives that carry large interest rates and other charges.
Federation chairman Mike Cherry said: “While the big banks have ruled out the use of personal guarantees where smaller interruption loans are concerned – a very welcome development – there is, at this point, nothing to stop them pushing those inquiring about these loans towards conventional products where personal guarantees are needed, and high interest rates are applied.”
Banks pushed to waive personal guarantees for SME coronavirus loans
Ministers are pushing for an agreement with the banking sector that would mean small companies need not provide personal guarantees to access interest-free loans designed to ease coronavirus-related pressures.
Treasury trebles spending plans
The Treasury has trebled its Budget plans to raise cash from markets in April as it looks to support the economy through the coronavirus pandemic.
The Debt Management Office says it will seek to raise £45bn in April – a record cash issuance of UK government bonds. The figure compares with an anticipated £16bn set out at the time of the Budget in March.
Former Bank of England deputy governor and member of the Office for Budget Responsibility Sir Charles Bean has suggested Government borrowing could hit the same level as during the financial crisis, saying: “Together with the costs of the measures, the budget deficit could easily top £200bn this year according to the Institute for Fiscal Studies. That is nearly 10% of GDP, the same level reached in the Great Recession.”
Social distancing measures to hit GDP
Analysis by PwC suggests that, while half of workers can carry out their job from home, social distancing measures designed to slow the spread of coronavirus will contribute to a fall in GDP this year.
PwC’s report suggests that at least 11% of the economy will be directly affected by the social distancing measures, which include the closure of pubs, restaurants and a swathe of shops.
Jing Teow, senior economist at PwC, said that many businesses will have introduced remote working and “with the right technology more could follow suit, mitigating some of the loss to output and business activity”, but noted that this is “less feasible for sectors that require a physical presence.”
For these entities, she added, “making full use of government support such as the job retention scheme will be critical.” While PwC previously forecast economic growth of +1%, this has been revised to between -3% and -7% since the outbreak.
Contactless limit raised to £45
Measures to help tackle coronavirus have seen an increase in the maximum spend for contactless payments fast-tracked.
As of today, the limit increases from £30 to £45, although UK Finance says the process of updating software in sale terminals may mean the new limit will not be active across all stores immediately.
On the use of contactless payments, KPMG’s Linda Ellett comments: “There are those who aren’t perhaps as adaptive to these new technologies and need to be front of mind.”
CBI calls for support for medium-sized businesses
The Confederation of British Industry (CBI) has called for support to be given to “stranded middle” businesses who are not eligible for the Government’s coronavirus relief package.
While companies with revenue of less than £45m can turn to the £330bn business interruption loan scheme and large investment grade companies can access the Bank of England’s Covid Corporate Financing Facility bond-buying programme, the CBI warns that a number of firms cannot access either initiative.
CBI chief economist Rain Newton-Smith says there are “a lot of distressed businesses that are very big employers around the UK,” adding that a number of medium-sized businesses are going unsupported. “We feel it’s an issue that needs to be addressed at speed and at scale”, she added.
Returning NHS workers warned over tax avoidance schemes
Former doctors and nurses returning to the health service to help the NHS amidst the coronavirus crisis have been warned to avoid tax-saving schemes designed to disguise their earnings.
HMRC has warned that complex tax arrangements that see staff working via umbrella companies and taking home up to 85% of their pay resemble other disguised remuneration schemes that have seen workers hit by substantial tax bills under the Revenue’s loan charge policy.
Dawn Register of BDO comments: “In the taxman’s view they do not work and anyone who enters into them can expect to be subject to investigations and financial penalties.”
HMRC has advised staff offered such a scheme to use its online tax calculator to check the level of income tax and National Insurance they should be paying.
Grant Thornton asks staff to take pay cut
Grant Thornton has asked its 4,500 UK employees to take a pay cut to avoid the need for an alternative package that would involve unpaid leave and layoffs amidst the COVID-19 crisis.
A spokesperson for the audit firm said: “The coronavirus pandemic means all businesses, including our firm, are operating in unprecedented and uncertain times. We know that this is a difficult time for many of our people, particularly those who have caring responsibilities.”
With this in mind, it has offered staff “the opportunity to volunteer for a temporary reduction in their contractual hours or a short-term sabbatical.” Saying the move comes in “clearly exceptional times”, the firm added that the voluntary measures “help us to support our people while also continuing to support our clients.”
Those taking a sabbatical until June will receive 30% of their salary, with a 40% reduction in hours and pay until the end of May also on the table.
Laura Ashley places 1,700 staff on furlough
The administrators of Laura Ashley have made 268 staff redundant and placed 1,669 on furlough, with redundancies across head office and back office functions.
All 147 Laura Ashley stores closed last week, with 70 shut following a review of their long-term viability and the rest closed due to COVID-19.
Rob Lewis and Zelf Hussain of PwC anticipate reopening all stores for a period of time, either because they form part of the sale of the business or to sell through existing stock.
The administrators continue to operate the retailer’s online business, with employees working from home where possible.
Think-tank: National living wage hike justified
The Learning and Work Institute think-tank says an increase in the minimum wage is right, despite the pressure the coronavirus crisis is putting on employers.
As of today the national living wage for those 25 and over increases by 51p to £8.72 an hour. The Resolution Foundation and the Institute for Fiscal Studies have suggested that the increase should be delayed due to the financial stress brought about by the pandemic, with many economists warning an recession is on the cards.
However, Joe Dromey of the Learning and Work Institute says that the increase is “the right thing to do”, despite it being “a difficult and uncertain time for employers.”
He says: “Employers will have long planned for this pay rise,” adding: “Reversing the increase would deny a pay rise to hundreds of thousands of low paid workers”, including many “who are on the front line in the national effort to tackle the virus .”
London office investment plunges 74%
The amount spent by property investors on office buildings in London fell by 74% in March amid the ongoing coronavirus crisis. Just £534m of City and West End office purchases were agreed as travel restrictions made viewings and the signing of deals difficult, according to a study from property agent Avison Young. Around £2.4bn of purchases were agreed in Q1, a 13% decline, according to the research.
TPR warns of scams during COVID-19 crisis
The Pensions Regulator has warned that pensions savers could be exploited by scams amid the coronavirus crisis, In updated guidance, it said: “Pension trustees should give greater attention to the heightened risk of members being targeted by scammers and unscrupulous financial advisers.”
The regulator last week issued guidance to trustees saying that all transfer activity could be halted for three months, with former pensions minister Baroness Ros Altmann among experts who had called for a pause over concern that valuations of pension pots would be inaccurate due to
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
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