Coronavirus business news update.
2nd April 2020.
James Salmon, Operations Director.
Fifth of SMEs at risk despite aid package
Some 20% of UK SMEs are unlikely to receive the funding required to see them through the next four weeks, research from the Corporate Finance Network group of accountants claims, with between 800,000 and 1m firms at risk of going bankrupt.
While Chancellor Rishi Sunak said a fortnight ago that firms would be able to discuss Coronavirus Business Interruption Loans (CBILs) of up to £5m with banks, thousands of companies have reported difficulties in contacting lenders or being told they are ineligible for the scheme.
Kirsty McGregor, founder of the Corporate Finance Network, has warned that the UK could lose up to a million SMEs within the next month, saying this will be irreversible and “catastrophic” for the economy.
Business Secretary Alok Sharma has said it is “unacceptable” for banks to refuse small businesses emergency coronavirus loans and said the financial sector should be doing “everything they can” to help companies.
Chancellor Rishi Sunak is tomorrow expected to announce an overhaul of the bailout scheme for businesses, banning banks from asking small firms for personal guarantees on loans and removing a requirement for businesses to demonstrate that they have no other means of accessing funding.
Owner-director support call
Blick Rothenberg has warned that owner-directors have fallen between the cracks in regard to Government support for the economy during the coronavirus pandemic.
The firm’s Richard Churchill said: “Protecting these owner-director microbusinesses now is essential if we want to ensure our economic recovery once this crisis is over.”
Manufacturing activity contracts
The IHS Markit / CIPS purchasing managers’ index has revealed that in the wake of the COVID-19 outbreak, new orders in the manufacturing sector were down to 47.8 points in March, representing a three-month low on an index where a score of below 50 indicates contraction.
Duncan Brock, group director at the Chartered Institute of Procurement and Supply, commented: “The manufacturing sector was knocked sideways by the impact of COVID-19 and into contraction territory, experiencing some of the most challenging trading conditions since PMI records began.”
Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics, commented: “The PMI likely greatly understates the pace of the downturn now underway in the manufacturing sector,” adding that with consumers clamping down on discretionary spending due to ongoing uncertainty, the manufacturing sector “inevitably will struggle further.”
Tech tax comes into force
The UK’s digital services tax has come into force, with the levy to apply to revenues generated by social networks, search engines and online marketplaces.
The 2% tax, which affects profitable companies which generate more than £500m a year in global revenues, will apply to any revenues generated through advertising to British users or revenues made through facilitating transactions.
Firms liable for the levy will not need to make any payments until 2021, with the Treasury recently telling companies that it does not anticipate any to need to register and pay the tax “for some time”.
Finablr appoints CEO while CFO stands down
Finablr has appointed a new chief executive, with Bhairav Trivedi taking the role.
The firm, which owns Travelex, also announced that CFO Rahul Pai has quit. Former CEO Promoth Manghat stepped down last month as the firm sought to accommodate requirements laid down by EY, its auditor. EY has since resigned over concerns about the composition of the board, corporate governance, related-party transactions and off balance sheet debt.
The Times notes that Finablr last month discovered about $100m of cheques that may have benefited third parties and appointed an accounting firm, believed to be PwC, to prepare for “a potential insolvency appointment with a view to maximising value in the group”.
Employers using Zoom could be sued over privacy
Employees working from home who use Zoom to attend virtual meetings could sue their employers if they object to how the web conference tool handles their personal information.
Workers who have to use the software, which shares personal data with other companies, may be entitled to a payout.
James Castro-Edwards, partner at law firm Wedlake Bell, said: “There is a big risk an employee could ask for compensation… If a workforce was forced to use Zoom to communicate and it transpired that personal data was going to places that they hadn’t agreed to they could claim they had been distressed.”
Housing Market
UK House Prices rose three per cent last month just before the coronavirus outbreak hit, according to Nationwide figures released today. But the bank warned housing market activity is “grinding to a halt” as the coronavirus lockdown stops buyers and sellers from viewing properties. Banks have also withdrawn mortgages or made it tougher to secure mortgages, also dampening UK house prices.
Treasury faces £5bn stamp duty hit
The Treasury could miss out on up to £5bn in stamp duty as the coronavirus crisis hits property sales. Estate agency Savills forecasts a drop of between £4.78bn and £3.47bn in the levy this year, figures that would mark a decline of between 40% and 56% on the £8.57bn tax take forecast before the pandemic.
Analysis shows that 10,197 fewer properties were put up for sale in the first week of the social distancing measures rolled out by the Government when compared with the weekly average for 2019.
The data, from View My Chain, a website which tracks UK property sales, also shows that there were 5,072 fewer house sales agreed and 2,078 more agreed sales fell through.
Savills expects transactions and prices to improve in 2021, although the stamp duty haul will be down by between £800m and £1.56bn on previous expectations before bouncing back in 2022.
British Airways
British Airways is expected to announce it will suspend around 36,000 staff. The airline, which grounded much of its fleet due to the coronavirus crisis, has been negotiating with the Unite union for more than a week. The two sides have reached a broad deal but are yet to sign on some details. The agreement means that up to 80% of BA cabin crew, ground staff, engineers and those working at head office will have their jobs suspended but no staff are expected to be made redundant.
NHS staff warned over tax dodge schemes
With more than 20,000 former and retired health service staff returning to work to help tackle the COVID-19 outbreak, HMRC has reiterated a warning that rogue firms may target staff with aggressive tax avoidance schemes that promise workers they can take home up to 85% of their pay but risk opening them up to penalties for dodging tax.
An HMRC spokesperson said: “It is shocking that unscrupulous promoters of tax avoidance schemes are targeting returning NHS workers during this difficult time.”
Heather Self of Blick Rothenberg comments: “It’s an absolute disgrace that when we are relying on thousands of NHS staff to keep this country safe, unscrupulous promoters are offering schemes which put these workers at risk of losing money and falling foul of HMRC.”
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?
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?
Call us today