Covid-19 business news update 15th April 2020.

15th April 2020.

James Salmon, Operations Director.

During the Covid-19 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.

The FTSE100 gave up early gains to finish 50 points down at 5791 yesterday. Shares in British American Tobacco dropped sharply on report of a U.S. criminal probe, while signs that Britain will remain under lockdown for a longer period dented the markets mood.

The UK government signalled there would be no easing of lockdown measures this week after the death toll from COVID-19 infection surpassed 11,000 on Monday. The exporter-heavy FTSE 100 was dragged lower by a stronger pound, while stock markets elsewhere in Europe extended last week’s strong run on signs some countries were letting businesses get back to work.

The UK Economy could shrink by 35% in the second quarter of 2020 and unemployment could hit 10% as lockdown measures take their toll, Britain’s budget watchdog has warned. The Office for Budget Responsibility said such a slowdown could send the budget deficit to its highest level since World War II as it combines with unprecedented govt spending (see below for more details).

The global number of confirmed cases of covid-19 neared the 2 million mark, as the number of deaths surpassed 125,000. While some governments – France and India – have extended their lockdowns, others, which estimate they have passed the peak of the curve, are starting to reopen their economies. Certain businesses in Austria and Italy reopened, and some people in Spain are already back at work.

UK Retail Footfall fell to the lowest level on record last month after the government ordered all non-essential stores to close during the coronavirus lockdown. Footfall plunged 41% in March compared to the previous year, the latest data showed, driven by a drop of 81% in the final week of the month following the implementation of a UK lockdown.

The coronavirus pandemic will cost Global Airlines up to $314bn in revenues, industry body the International Air Transport Association has said. The figure reflects a 55% fall in passenger revenues year-on-year, with air traffic expected to decline by 48%.

OBR predicts record contraction of economy

The Office for Budget Responsibility (OBR) has warned that the economy could contract by a record 35% by June, with chairman Robert Chote saying this would mark the biggest decline “in living memory”.

The OBR forecast suggests a three-month lockdown followed by three months of partial restrictions would see an economic decline of 35.1% in Q2, following growth of 0.2% in Q1.

If this scenario plays out, the OBR suggests the UK economy would contract by 12.8% this year but get back to its pre-crisis growth trend by the end of 2020, with extra spending by the Treasury in support of the economy set to help limit damage.

The budget watchdog has forecast that unemployment will rise to 10%, from the current 3.9%.

Considering the OBR report, Chancellor Rishi Sunak said that while the report was “not a forecast or a prediction but one possible scenario”, he is “deeply troubled” by the warning which highlights the “serious implications” COVID-19 will have for the UK economy.

“These are tough times, and there will be more to come,” Mr Sunak said, while noting that the OBR expects the economic impacts to be “significant” but “temporary, with a bounce back in growth.”

IMF: Global GDP set to fall 3%

The International Monetary Fund (IMF) has warned that the coronavirus pandemic is set to deal the global economy a blow that exceeds the hit seen during the financial crisis, forecasting that $9trn (£7trn) of output will be lost this year and next.

IMF economists expect global GDP will fall by 3% in 2020, the biggest drop since the Great Depression of the 1930s.

It forecasts that the UK economy will shrink by 6.5% this year, its biggest fall since 1921, while Germany will see a 7% dip and Italy will see its economy slip 9.1%.

Japan, the US and Canada are forecast to see recessions of 5.2%, 5.9% and 6.2% of GDP respectively.

Business confidence slides

BDO ’s business confidence index fell by 21.69 points in March to 79.95, marking the sharpest monthly fall since the index was launched 15 years ago, with the decline similar in size to the cumulative falls during the 2008 financial crisis.

BDO’s employment index fell by 26.89 points to 85.97, the first dip since November 2012. Kaley Crossthwaite, partner at BDO, said: “The speed of the decline across all indices reveals how the economic crash caused by COVID-19 is different to the 2008 financial crisis when the fall was spread across multiple months.”

Trump v WHO

In a staggering move, President Donald Trump announced America will stop funding the World Health Organisation (WHO) while it conducts a review of the UN agency. Mr Trump accused the WHO of failing in its response to covid-19 and spreading Chinese disinformation about its origin — even though he himself judged the outbreak to be a “very small problem” on 30th January, when the WHO declared it to be a global emergency, and also praised China’s efforts to contain the virus. America is the largest single donor to the organisation, contributing nearly a quarter of it’s funding.

The move to limit support to the WHO during a global pandemic is unprecedented!

In a statement Tuesday, UN Secretary General Antonio Guterres said the chance to investigate how the disease spread around the world would come later.“As it is not that time, it also not the time to reduce the resources for the operations of the World Health Organization or any other humanitarian organization in the fight against the virus,” he said. “As I have said before, now is the time for unity and for the international community to work together in solidarity to stop this virus and its shattering consequences.”

Billionaire philanthropist Bill Gates, the co-founder of Microsoft Corp., warned in a tweet that cutting off funds for the WHO “is as dangerous as it sounds.Their work is slowing the spread of COVID-19 and if that work is stopped no other organization can replace them. The world needs WHO now, more than ever”

Oasis and Warehouse to collapse into administration

Oasis and Warehouse are set to collapse into administration, putting about 2,300 jobs at risk.

Deloitte is expected to handle the insolvency process for the companies, which, until the COVID-19 lockdown, operated 90 standalone stores and more than 400 concessions in department stores. Icelandic bank Kaupthing, which controls the business, had been seeking a new investor to take on the fashion chains, and at least two prospective buyers are thought to have come forward, but a deal is unlikely to be finalised before the imminent administration

Hix Restaurants appoints administrator

Deloitte has been appointed as administrator to chef Mark Hix’s restaurant and hotel business, with WSH and Mark Hix Restaurants being hit financially by the coronavirus crisis.

The pandemic and Government shutdown of sites has put pressure on the hospitality industry, with restaurant chain Carluccio’s appointing FRP Advisory as administrator last month.

The sector was facing pressure even before the pandemic struck, with figures showing that the number of restaurant and pub insolvencies were up 10% last year to 1,452 and 526 respectively

FSB in support call for self-employed workers

The Federation of Small Businesses (FSB) has warned that large numbers of self-employed workers have “fallen through the gaps” of Government coronavirus support.

The FSB says the recently self-employed, those who work for themselves with annual earnings of more than £50,000 a year and directors of limited companies are among those being left “frightened and bewildered” about their financial situation.

FSB national chairman Mike Cherry said those struggling to secure help include “hard-working people who have built up successful businesses and paid taxes all their lives”.

Mr Cherry added: “We call on the authorities to look urgently at what help can be provided to those who miss out on the income support for self-employed.”

One in nine homeowners take mortgage holiday

One in nine UK homeowners has taken a so-called “mortgage holiday” as their finances have been hit by the effects of COVID-19.

Figures from UK Finance show lenders have agreed that 1.2m homeowners can delay repayments as jobs are cut and wages reduced. Typically, this defers a mortgage bill of £775 a month, with borrowers given the option of delaying up to three months of repayments.

Stephen Jones, chief executive of UK Finance, said lenders had “pulled out all the stops” to hand out an “unprecedented” number of payment holidays.

Help to Buy extension planned to boost housebuilding

The Government is in talks with housebuilders about extending the Help to Buy scheme in order to stimulate the industry once lockdown measures are eased.

Help to Buy is due to be replaced in April next year with a scaled-back version.

Further possible initiatives being considered by ministers to support builders with cashflow concerns include deferring the payment of planning obligations and extending planning permissions that may otherwise lapse.

HMRC taxpayer inquiries suspended as pandemic continues

HMRC’s inquiries into taxpayers and firms under investigation have been suspended as the coronavirus crisis continues, with a Government spokesperson commenting: “It is right that HMRC does everything possible to protect individuals, businesses and the economy during this extremely difficult time.”

Meanwhile , taxpayers have been requested not to press HMRC for information or documents. Fiona Fernie of Blick Rothenberg cautioned: “For individual taxpayers and businesses whose activities are currently curtailed, it would be sensible for them to use the time they have now to deal with HMRC rather than store up problems for the future.”

Separately, the FT notes that HMRC has stepped up efforts to tackle tax evasion, with it now operating 209 task forces to target undeclared earnings.

FRC: No change to going concern

The Financial Reporting Council (FRC) has said that UK companies still need to assess whether they can stay in business for the coming year under existing rules, despite uncertainties caused by the coronavirus.

Companies are required to state in their annual reports if they are a “going concern” for the coming 12 months.

The FRC said talks with investors showed they still want “high-quality information” during the pandemic.

“The FRC clarifies that the accounting and auditing standards on going concern have not changed, nor has the FRC increased pressure on auditors to be tough,” it said. “Auditors should challenge management appropriately on their judgements, and given the current uncertainty ensure they have sufficient appropriate evidence to support the judgements they make.”

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