Coronavirus business news update 8th April 2020.

8th April 2020.

James Salmon, Operations Director.

During the Coronavirus outbreak we will continue to share (as we can) the business news stories we have seen that we think will affect our members and readers. The news stories you might have missed that might have an impact on SMEs and those that sell on credit.

ONS figures show UK productivity weak before pandemic

The Office for National Statistics (ONS) has revealed that UK productivity was up 0.3% year on year in the final quarter of 2019, with the figure barely growing since the 2008 financial crisis.

The ONS stated: “In historical terms 0.3% is still a very low productivity growth rate, significantly below the post-2008 economic downturn median,” while Howard Archer, chief economic adviser to the EY Item Club, noted that “coronavirus is bound to take a major near-term toll on business investment.”

Loss of working hours to equal 195m full-time jobs, UN agency warns

The International Labour Organization, an agency of the UN, has warned that the coronavirus crisis will cut working hours by almost 7% worldwide in Q2 2020, equivalent to the loss of 195m full-time workers.

“Workers and businesses are facing catastrophe, in both developed and developing economies,” said ILO director general Guy Ryder. “We have to move fast, decisively, and together. The right, urgent, measures, could make the difference between survival and collapse.”

In the UK, KPMG and REC’s permanent placements index fell from 52.9 in February to 31.7 in March, while the temporary billings index fell from 49.7 to 35.6. Any reading below 50 signals contraction. The vacancies index fell from 56 to 47.8 in March, marking the first negative reading since 2009.

Coronavirus loan scheme failures risk mass defaults

Data from UK Finance show that banks have paid out just £291.9m to just over 2,000 businesses under the coronavirus business interruption loan scheme.

This translates as an approval rate of just 0.65%. Alberto Thomas of Fideres Partners warns of an “immense wall of redundancies and defaults coming” if the pace of lending is not accelerated.

A report from Fideres shows the monthly pay roll of the UK’s 6m SMEs amounted to £41bn.

Giles Murphy, a partner at Smith & Williamson, said directors were mulling over winding up their business now instead of taking the risk of handing assets to a bank later, after being required to make personal guarantees on loans.

Meanwhile, a survey by the British Chambers of Commerce found a fifth of small businesses still plan to apply for support.

It also found that more than half of businesses have at most three months cash left, while 6% said that they had already run out of cash. Over a third said they were planning to furlough 75-100% of their workforce over the next week.

Markets and other news

The FTSE 100 saw another turbulent day yesterday which saw the index touch 5780 intraday, closing up 122 points at 5704.5.

The UK markets gained across the board as signs of the coronavirus infections easing in worst-hit regions of Europe boosted gains in oil, mining and battered travel stocks.

As the hardest-hit countries of Italy and Spain looked to relax lockdowns after steady declines in fatality rates, while the outbreak showed signs of levelling off in New York.

Rishi Sunak will take over prime ministerial duties if Dominic Raab becomes incapacitated while Boris Johnson is unable to lead government. Raab, as first secretary of state, is deputising while the Prime Minister is intensive care with coronavirus.

PM Boris Johnson’s plan to review whether the coronavirus lockdown measures could be eased on Monday has been shelved. Announcing the drastic restrictions to tackle the Covid-19 outbreak, the prime minister committed to inspect the evidence to see if the measures could be eased in three weeks.

Demand for UK Government Bonds was its highest for three years today as Britain sold £3.25bn worth of debt to help fund its unprecedented coronavirus support programmes.

Coronavirus developments and March’s economic reports have continued dictating market sentiment in recent weeks, resulting in significant currency volatility. The GBP/EUR exchange rate rose from lows of €1.06 to €1.14 while EUR/GBP dipped to €0.87. Meanwhile, GBP/USD recovered from 1.14 to 1.24, while EUR/USD fell from highs of 1.11 to around 1.07.

FCA plan focuses on consumer protection

The Financial Conduct Authority has set out its business priorities for the next three years, but has warned that it might be forced to change it in the coming months due to the coronavirus pandemic.

The regulator also said it will transform its own approach to regulation in response to the pandemic, with a focus on making faster and more effective decisions.

The FCA set out four priorities which it plans to focus on, including: ensuring safe payments and access to cash; avoiding unaffordable debt; protecting people from risky or poor value products; and making sure prices and terms on online products are fair.

Its strategy will include a new publicity campaign to warn consumers of the dangers of high-risk retail investments, with the project to be funded by a new levy on regulated firms.

The regulator explained that the risk to consumers around investments has been heightened by pension freedoms and the shift to defined contribution pensions, and that it is particularly concerned about the sale of high-risk investment products.

Chris Woolard, FCA interim chief executive, said: “In a matter of weeks, coronavirus has altered the UK’s financial landscape dramatically. At times like this it is more important than ever that the FCA leads the way on the protection of consumers, firms and the markets.”

Airlines gain £1bn in fees relief

The UK government has given airlines permission to delay £1bn in air traffic control fees to help them cope with the coronavirus pandemic.

Transport minister Chris Heaton-Harris refused to rule out the state taking a stake in airlines that have been worst hit, as talks continue with Virgin Atlantic over a £500m bailout.

Meanwhile, global airline trade body Iata has warned that if governments do not intervene 25m jobs in the industry are at risk. Carriers are facing unprecedented claims for refunds, estimated at £4.5bn as well as missing out on new bookings.

In the UK, Abta is calling for a change in the law so refunds can be delayed by several months and replaced with a “refund credit note”, otherwise many firms will be forced into bankruptcy.

Anger over rates holiday for large retailers

The government is being urged to revise its coronavirus support package after it was revealed that Tesco will benefit to the tune of £700m from a 12-month business rates holiday, despite a predicted increase in profits.

Labour MP and member of the Treasury select committee, Rushanara Ali, commented: “It’s an absolute scandal that the government is providing a £700m tax break to Tesco while millions of self-employed and freelance workers, even those who qualify, cannot get any money until June.”

Tesco reported a rise in adjusted earnings and hiked its dividend, as initial panic buying triggered by the Covid-19 crisis started to abate. Pre-tax profit for the year through March declined to £1.32bn, down from £1.62bn on-year.But sales edged up 0.2% to £44.9bn and operating profit before exceptional items rose 14% to £2.96bn. Tesco declared a full-year dividend of 9.15p per share, up 59% on-year.

Google tax bill revealed

Google reportedly paid £44m in corporation tax in Britain for 2019, as over £1bn in pay and bonuses was awarded to its 4,439 staff in the country.

Accounts filed with Companies House revealed the tax payment, which is down on the £66m paid for 2018. This comes as the government attempts to stem the transfer of profits and cash to countries with lower tax levels, with a proposed 2% digital service tax bringing in some £32m extra in taxes from the US internet firm.

Advertising revenues made by Google in the UK are reported in other jurisdictions with analysts estimating the company made £5.7bn in ad revenue in the UK last year.

Paul Monaghan, chief executive of Fair Tax Mark, said: “Once again, it seems like Google are writing their own rules in the UK. Income is up but corporation tax charges are down.

That’s before we get to the puzzle of how they continue to get away with booking so little of their UK advertising revenue through their UK subsidiary.”

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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Read our blog – What is credit management?

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see our blog – 15 steps to avoid invoice fraud

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