Coronavirus: business update.
3rd 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.
RSM: Insolvencies estimate ‘alarmist’
RSM has questioned reports that 800,000 to 1m businesses UK businesses could collapse as a result of the coronavirus crisis, describing the figure as “alarmist at best”.
Pointing to the estimate, which comes from an unnamed accounting firm cited by the British Chambers of Commerce, RSM partner Gareth Harris said: “I don’t believe that is a realistic number. That would be genuinely unprecedented and while we are in strange times I don’t believe that is a fair reflection.”
He suggested a total in the 70,000-100,000 range was more realistic, adding: “You are going to see a pretty sharp spike in insolvencies for businesses that were struggling before any of this happened.”
Coronavirus ‘already damaging businesses’ – BCC
The British Chambers of Commerce (BCC) has released the first COVID-19 Business Impact Tracker study, cautioning that small businesses have only three months or less of cash reserves and that there has already been a “sharp and significant” reduction in domestic and overseas revenue.
BCC director general Adam Marshall commented: “While businesses have welcomed the unprecedented size and scope of the Government support packages, our findings highlight the urgent need for that support to reach businesses on the ground as soon as possible.”
Loan scheme revamped
The emergency loans scheme for businesses struggling amid the coronavirus pandemic has been revamped, with Business Secretary Alok Sharma saying changes to the initiative will make it easier for smaller firms to access loans.
The Treasury said it had received more than 130,000 loan enquires from firms but fewer than 1,000 had been approved.
While government-backed loans for small businesses were only available to firms that had been turned down for a commercial loan from their bank, the rethink will mean applications will not be limited to businesses that have been refused a loan on commercial terms.
With concern that support for firms in the middle bracket came up short, the revamped scheme will offer government-backed loans of up to £25m to firms with revenues of between £45m and £500m.
Changes set out by Chancellor Rishi Sunak will also see banks banned from asking company owners to guarantee loans with their own savings or property when borrowing up to £250,000. Carolyn Fairbairn, head of the Confederation of British Industry, welcomed the rejigged scheme, describing the changes as a “big step forward”.
Small firms missing out on grants
The Telegraph reports that a number of small firms are missing out on £10,000 grants earmarked to help them through the COVID-19 crisis as local authorities, which are distributing the money through the business rates system, are unable to get in touch.
Councils tend not to have financial information on businesses that have never paid rates – including those qualifying for rates relief – so are writing to them.
However, some cannot be reached as they are closed due to the lockdown.
Commenting on the struggles faced by smaller firms, ICAEW chief executive Michael Izza said: “Businesses are struggling to access the finance they urgently need and that struggle is getting worse.”
Start-ups face ruin due to missing support
Researchers and professors from Manchester Metropolitan University and the Enterprise Research Centre have warned that hundreds of new start-ups could be put out of business because of gaps in the Government’s rescue package for the self-employed.
The researchers noted that anyone who created their business after April 2019 will not be eligible for help from the self-employment income support scheme.
An estimated 750,000 sole traders could miss out, while separate research from the Institute for Fiscal Studies put the figure at almost 2.2m.
HMRC ‘likely to extend deadlines’ amid crisis
Dawn Register, partner and head of tax dispute resolution at BDO, writes in City AM on the Treasury’s moves to raise an extra £4.7bn through a crackdown on tax evasion and avoidance, advising recipients of letters from HMRC that deadlines for responses are likely to be extended given the ongoing coronavirus crisis.
It is also noted that HMRC’s Connect system “can identify individuals who hold assets in multiple jurisdictions.”
Consumer confidence
UK Consumer Confidence in the first quarter of the year understandably fell nine percentage points as the coronavirus pandemic hit home. As furloughing became the buzz word, confidence in job security fell 15 percentage points from the previous quarter to -20, Deloitte’s consumer tracker showed.
UK Retail Sales
Despite panic buying and hoarding, UK Retail Sales plummeted to the worst levels on record in March as footfall plunged and non-essential stores were forced to close amid the coronavirus pandemic. Like-for-like UK retail sales at physical stores fell by a record 34.1 per cent and total like-for-like sales, both in-store and online combined, fell 17.9 per cent.
Online like-for-like sales increased by 13.7% with shoppers turning to e-commerce platforms as physical stores locked their doors.
Sophie Michael, head of retail and wholesale at BDO, said “it’s no surprise” that March was the worst month on record for the high street, with uncertainty making consumers more cautious with their money. She added that the outbreak is likely to have “sped up the shift away from in-store shopping as consumers become even more accustomed to buying online.”
Oil
The oil price spiked 30% upwards yesterday after Trump tweeted that a deal was close between Saudi Arabia and Russia who are currently engaged in a price war. Russia promptly denied it.
Coronavirus set to trigger deep recession
Ratings agency Fitch has predicted a deep global recession in 2020 following the coronavirus outbreak. It expects worldwide economic activity to decline 1.9% in 2020, with US GDP to slip 3.3% while the eurozone will see a 4.2% decline and UK GDP will fall 3.9%.
Brian Coulton, Fitch’s chief economist, said: “The forecast fall in global GDP for the year as a whole is on a par with the global financial crisis but the immediate hit to activity and jobs in the first half of this year will be worse.”
Global economy & US unemployment
The global economy was shocked yesterday at the 6.6 million initial jobless claims in the USA following the 3.3 million last week. That’s near on 10 million in a fortnight blowing out of the water previous records. The pandemic has been estimated to cost the global economy $4.1 trillion! despite the figures the US stock market rose over 2%.
Infections
Not strictly business news, but it had to be noted that the world passed 1 million confirmed coronavirus infections yesterday with more than 53,000 deaths. Who knows how many unconfirmed there are. The UK has continued to see an increase in deaths, if we needed any reminder of why all this is necessary.
Food Prices
Those starring at empty supermarket shelves maybe surprised to hear that world food prices dropped in March according to the UN’s Food and Agriculture Organisation. Prices of a basket of goods were 4.3% lower than in February.
The slump in the oil price dragged down demand for biofuels, and thus the demand for sugar and vegetable oils.
Between-jobs workers penalised in Government scheme
The Treasury is understood to be in talks to fix problems with the coronavirus job retention scheme after it emerged that workers starting new jobs or moving between jobs would be excluded from it.
Money Saving Expert’s Martin Lewis has encouraged those who have found themselves in this situation to request that their former employers rehire, and then furlough, them.
Job losses jump despite rescue package
The FT looks at how 950,000 have applied for universal credit despite Government support for employers, with KPMG’s Yael Selfin saying some firms are uncertain over the help they’ll receive.
Property market ‘grinding to a halt’
Figures from Nationwide show that house prices rose 3% year-on-year in March, outdoing the 2.3% increase recorded in February, On a month-by-month basis, UK house prices were up 0.8% in March, compared with a 0.3% climb in February.
The analysis shows that the average house price in the UK hit £219,583 in March. Nationwide notes that the figures gauge the period just before the coronavirus outbreak started to impact the market, with the bank saying housing market activity is “grinding to a halt” as Government requests to stay at home prevent in-person viewings.
Nationwide’s chief economist Robert Gardner said a lack of transactions “will make gauging house price trends difficult in the coming months”.
Howard Archer, chief economist at the EY Item Club, offers that while housing market activity “should progressively pick up” once restrictions on movement are lifted, “the housing market looks unlikely to return to the levels seen at the start of 2020 for some time.”
Weighing the benefits of WFH
James Dean in the Times considers the merits of working from home, including the savings made on office facilities and transport.
He notes that KPMG reportedly gives each of its 16,000 employees a £3.50-a-day lunch allowance, calculating that if staff were to eat at home instead the firm would save £13.2m a year.
Premier League urged to act on player pay
Julian Knight, chairman of the Digital, Culture, Media & Sport select committee, has called on the Government to impose a “windfall tax” on Premier League clubs that refuse to impose pay cuts on their players while applying for a public bailout to cover wages for non-playing staff.
Voicing concern that clubs are taking advantage of the Coronavirus Job Retention Scheme, Mr Knight has written to Chancellor Rishi Sunak demanding that top flight clubs “do the right thing.”
Accountants adapt to audits amid lockdown
As the audit season commences for companies in a period where the COVID-19 outbreak has restricted movement amid a Government lockdown, some auditors are turning to cameras to help compile annual accounts.
Hemione Hudson at PwC comments: “Normally we have significant teams out counting but we are now looking at different ways of doing this.”
Mazars’ Bob Neate says one option is to use cameras already installed in a company’s warehouse to verify its stock levels.
Scott Knight of BDO notes that difficulties arise from not being able to discuss issues in person, “and not being able to physically observe the controls that are used to run a company”.
The Financial Reporting Council has issued guidance saying auditors should agree what can be done remotely, what can be done using technology and where confirmation depends on being physically present.
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