Covid-19 business news update 20th April 2020.

20th 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.

Record number of businesses in distress

Begbies Traynor has warned that the 500,000-plus UK businesses in significant financial distress in the first three months of the year could be just the “tip of the iceberg.”

The number of bars and restaurants facing potential insolvency increased 37% in the last quarter, while real estate and property firms in the same situation increased by 21%.

Begbies Traynor’s quarterly Red Flag Alert indicates that a record 509,000 companies were facing significant financial difficulty, up 3% on the quarter prior. SMEs have been hit hardest, with 504,000 of the total distressed businesses employing under 250 people.

A third of small firms fear for the future

A poll from Hitachi Capital shows that almost a third of small firms – and 19% of medium-sized companies – are concerned about their survival chances in the wake of the coronavirus pandemic and resulting lockdown.

The poll saw almost a third of SMEs say issues with technology are hindering efforts to operate as normal, with 21% of small firms and 15% of medium-sized entities saying remote working poses their business a problem.

Insolvency rule rethink on the cards

Changes to insolvency rules being considered by ministers would see vulture funds able to take control of companies, with the court-led scheme of arrangement process reportedly in line for an overhaul.

The rethink would allow distressed debt investors to overrule creditors including traditional banks, but only if they can convince judges it is in the best interests of the company.

While a scheme of arrangement requires the consent of 75% of creditors by value and a majority by number across every class of creditor, the mooted reform would see dissenting creditor classes having to accept terms proposed by others.

The proposed mechanism, a “cross class cram down”, would aim to ensure finances are restructured more quickly. Carl Jackson of Quantuma described the possible shift as a “potentially innovative approach”, adding that it “avoids ransom creditors holding out and blocking a restructuring when they are being offered more than they would get in an insolvency.” This, he adds, is “good for companies, employees and creditors.”

Thousands more firms to benefit from CLBILS

The Treasury’s expansion of the Coronavirus Large Business Interruption Loan Scheme means up to 10,000 more UK companies are now eligible for financial support. The changes, which come into force on Monday, allow companies with more than £250m of revenue to access loans of up to £50m, while firms with between £45m and £250m can get a £25m loan.

Sunak mulls 100% loan guarantee

Chancellor Rishi Sunak is reportedly weighing up whether to fully underwrite loans to small businesses facing pressure due to the coronavirus crisis. He has held talks over the Coronavirus Business Interruption Loan Scheme with British Business Bank CEO Keith Morgan, addressing increasing calls for a shift that would see the state guarantee 100% of loans to small businesses where it currently covers 80%.

Bank of England governor Andrew Bailey has said there may be a case for a blanket 100% guarantee for loans up to £25,000, but added the decision is “entirely one for the Treasury”.

Carolyn Fairbairn, director general of the Confederation of British Industry, says a move to 100% could save thousands of businesses, while British Chambers of Commerce director general Adam Marshall has called for a simplified system to deliver access to one-year, interest-free loans

Less than a third of rescue fund handed to SMEs

Analysis by the Sunday Telegraph shows that less than a third of a £12.3bn fund designed to provide rescue grants to smaller companies has been distributed to firms.

The report shows that in some areas, just 9% of funds from the Government’s Small Business Grants Fund have been handed out.

The pot, which was announced in the Budget on March 11, is in place to provide rescue grants of £10,000, while a separate retail and leisure fund provides £10,000 or £25,000, depending on the rateable value of the firm’s property.

The Local Government Association said councils were “working fast” to hand over funds but said it had been a “significant challenge” to roll out the scheme “in a matter of weeks.”

The Department for Business, Energy and Industrial Strategy says around £3.7bn in grants have been distributed to small businesses and insists the Government “is working hard to make sure local authorities continue to get this money to eligible businesses as quickly as possible.”

Retailers fear pain will last beyond the end of lockdown

The FT on Saturday considered the climate for the retail sector, citing KPMG’s Paul Martin who predicts a 7%-10% decline in retail sales in 2020 and an 11%-12% fall in 2021.


The FTSE100 saw a strong end to last week trading over 5,800 intraday to eventually close up 158 points at 5,787. U.S. markets surged on Friday after a report said a Gilead Sciences drug showed some effectiveness in treating the coronavirus, giving investors hope there could be a treatment solution that helps the country reopen faster.

Furlough extension

The United Kingdom has extended by a month until the end of June the furlough scheme for workers at companies hurt by the coronavirus outbreak, finance minister Rishi Sunak said.

“It is the right decision to extend the furlough scheme for a month to the end of June to provide clarity,” Sunak said.“ It is vital for people’s livelihoods that the UK economy gets up and running again when it is safe to do so, and I will continue to review the scheme so it is supporting our recovery.”

The 80% subsidy, which is part of the Government’s job retention strategy, will be available for an extra month, taking it to the end of June.

Mr Sunak said the salary scheme would be extended again “if necessary”.

Confederation of British Industry director-general Dame Carolyn Fairbairn welcomed the move, saying it will “will help protect the economy and prevent unnecessary job losses through this new lockdown phase.” The extension, she added, means firms will not have to issue redundancy notices in the coming days to comply with 45-day consultation requirements

BoE governor urges banks to boost SME lending

Bank of England governor Andrew Bailey has called for banks to increase lending to small businesses, saying loans to smaller enterprises must be boosted or there is the risk of “a scarring effect” on the economy.

He also suggested that guarantees for small business loans could be extended. While the business interruption loan scheme sees the Treasury guarantee 80% of any losses, Mr Bailey suggested a blanket guarantee for loans under £25,000 may be of benefit.

In a call with reporters, he mused: “Is there a case for 100% guarantees for very small firms that account for quite a high volume of applications? Would it unblock things to change the risk appetite for those firms?”

Exporters locked out of loans

Industry leaders are demanding clarity over the Government’s emergency support package for businesses, with a number of small firms dependent on overseas sales saying banks have rejected exporters’ requests for state-backed coronavirus loans.

Banks, they say, have cited official guidance which states that a company must be “UK-based in its business activity” to qualify for the Coronavirus Business Interruption Loans Scheme.

Officials at the Department for International Trade have reportedly raised the issue with counterparts at the Treasury. The Federation of Small Businesses has said exporters “urgently need our help”.

Bailey: 35% GDP slide ‘not implausible’

Bank of England (BoE) governor Andrew Bailey has said a 35% decline in GDP over Q2 is “not implausible”.

Pointing to a scenario where the economy slipped by a third, which was set out by the Office for Budget Responsibility this week, Mr Bailey said it was “quite within the grounds of possibility”.

He told reporters on a conference call on Friday: “I don’t think there’s anything implausible about a second quarter contraction of that nature.” He also suggested that while the OBR report suggested the economy would bounce back swiftly from such an economic crash, the BoE may not be as optimistic.

Mr Bailey also noted that the BoE is using a tool designed to monitor high frequency data on the economy ahead of a potential hard Brexit to gauge the immediate impact of the coronavirus outbreak.

OECD boss hopeful of recovery by 2021 or 2022

Angel Gurria, secretary-general of the OECD, has said that while an economic downturn driven by the coronavirus outbreak will be “very bad”, the impending global economic crash will not last for four years like the Great Depression did.

He told the BBC that 2020 “is going to be a year in which there is going to be negative growth throughout, and there are going to be a lot of wounds.” However, he added that hopefully these wounds will be “scars by 2021 and 2022.”

SMEs need more help

Amit Pau, COO at business management tool provider Accloud, warns that, with just 6,000 small businesses managing to access the emergency loan initiative due to lack of clarity and lender support, many British SMEs are “fighting for survival.”

The Corporate Finance Network has suggested that a fifth of UK small businesses are at risk of collapsing within the next month. “SMEs are often run by the type of person who excels in the face of adversity. Hungry for success and willing to work all hours in the day to get it. But right now, that hunger is going to waste,” Mr Pau says.

Firms look beyond lockdown

Jill Treanor in the Sunday Times says firms are “starting to prepare for what life may look like after the lockdown”.

Will Gosling at Deloitte says: “My hunch is we’re going to see long-lasting change that’s driven largely by individuals wanting to build more resilience into their lives”, while Andrew Burn of KPMG considers whether firms will centre strategy more on local suppliers, saying: “We are already starting to see noise around that across multiple sectors.”

Also in the Sunday Times, Peter Evans considers the challenges faced by the media industry, pointing to a PwC report that says previous downturns suggest the “high levels of creativity and innovation” in the industry “should support it through these challenging times”.

Davis: Give small firms a two year tax holiday

MP David Davis says that once coronavirus is under control, the brakes must come off the economy and as many people as possible must be returned to work. He calls for tax cuts for small businesses, saying they should “effectively not be asked to pay any tax for the next two years”.

He says the idea of tax cuts “may give Chancellor Rishi Sunak a panic attack” but as “we will be paying back the cost of the Government’s massive virus-related aid for probably 50 years … we should not worry about tax breaks for small business for a relatively short period.”

McVey: Sales tax needed to replace business rates

Former Work and Pensions Secretary Esther McVey has backed calls for business rates to be abolished to protect high streets in the wake of the coronavirus crisis. She has voiced a belief that the levy should be replaced with a sales tax that would bring more equality between high street stores and online firms.

Ms McVey said business rates are “an out-of-date tax that needs modernising so that it falls fairly on all businesses and doesn’t destroy the high street.”

Extended lockdown puts 6.5m jobs at risk

Analysis by the Institute for Social and Economic Research (ISER) suggests that if the lockdown continues for an extended period, at least 6.5m jobs may temporarily be taken out of the economy – a fifth of the national total.

It estimates that almost 2m jobs in the wholesale and retail industry and 1.3m jobs in hotels, pubs, restaurants and cafes have disappeared, representing 48% and 75% of the sector totals, respectively.

Furlough and unemployment may see 11m not working

The Resolution Foundation think-tank has warned that more than 11m people in Britain could be out of work by summer as the furlough scheme expands far beyond official estimates.

It says that as many as 8.3m employees could be furloughed under the Job Retention Scheme, far exceeding the 3m figure in the Treasury’s initial assumptions.

With its analysis suggesting that 3.4m people could also be unemployed, the think-tank says 11.7m people may not be working in the second quarter of 2020.

Daniel Tomlinson, an economist at the Resolution Foundation, says the Government’s job retention scheme “shows the scale of the economic shock” with 8m people not working, but adds: “It does mean they will not be unemployed, which would be much worse”.

Nerves on edge as job retention scheme launches

With the Government’s job retention scheme going live today, HMRC boss Jim Harra has expressed concern over some elements of the initiative, saying: “Time really has been the enemy of perfection.”

Graduates to be hardest hit by recession

The Institute for Fiscal Studies (IFS) has warned that graduates entering the labour market this year are likely to be hardest hit by a recession prompted by the coronavirus outbreak.

The forecast is based on analysis of previous recessions which shows that new graduates find it harder to secure jobs than their immediate predecessors, especially in higher paying positions.

Paul Johnson, director of the IFS, said: “Previous experience suggests that university graduates will start off in lower paying jobs than otherwise and will suffer scarring effects,” adding that they are more likely to be unemployed several years after graduating while it will take “several years before their earnings catch up with what they otherwise would have been”.

Separate IFS research shows young workers, low-paid staff and women will see the biggest economic impact from COVID-19, as a “remarkable concentration” ar e employed in sectors which have had to shut down.

Firms look to ensure remote working works

Christine Armstrong in the Sunday Times considers the impact of the closure of many offices as staff take to remote working amid the COVID-19 lockdown. Anna Purchas of KPMG says that while the firm has a culture of agile working and the tech in place to support it, “working on your own from home like this on a long-term basis is unchartered territory for us all.”

She says there is a focus on well-being, noting that it is “easy to fall in to the trap of working longer hours and never really switching off when you are working from home.” Elsewhere in the paper, Gabriel Pogrund and Tom Calver look at how the lockdown may change the workplace, with KPMG’s Mel Newton saying it is “a game-changer in terms of working from home”.

House prices

UK House Prices fell in April due to the coronavirus, Rightmove said, with not enough properties coming to market during the month. Rightmove said the number of properties coming to the market in April saw a monthly price fall of 0.2% to £311,950, with the annual rate of increase from last April being 2.1%.

Property experts call for stamp duty holiday

Estate agent Knight Frank and property platform Rightmove believe a stamp duty holiday could help reignite the housing market after the coronavirus lockdown is lifted, echoing sentiment from the Royal Institute of Chartered Surveyors which earlier this month called for a brief pause of the levy as a “short term measure”. L

iam Bailey, global head of research at Knight Frank, said: “Despite the fact the Government will forgo a significant amount of stamp duty revenue in 2020, it seems clear there will need to be a stamp duty holiday to actually get the market moving once the lockdown is lifted.”

He added that the measure alone will not be enough, saying an extension to Help to Buy should also be considered. As well as calling for a stamp duty holiday, Rightmove has urged lenders to be lenient in regard to repossessions after missed payments which could lead to forced sales.


UK Retail Footfall declined at the fastest pace on record in March, numbers on Monday showed, as shoppers were forced to shun high streets and shopping centres due to Covid-19 lockdown measures.

Car repayments

The Financial Conduct Authority has proposed a freeze on car finance repayments, ruling out repossessions of vehicles during the coronavirus crisis. The FCA told car leasing firms today to offer three-month repayment pauses for customers in financial difficulty as a result of coronavirus.

COVID-19 prompts concern over care homes

The Sunday Telegraph looks at the climate for care homes amid increasing pressure brought about by the coronavirus pandemic.

The paper cites analysis from BDO, saying the firm’s report details how UK care home firms have been “buckling under the pressure of funding cuts, crippling debt and rising costs.”

BDO found that between 2014 and 2016, there were an average of 69 care home company insolvencies per year, with this up to 123 in 2017, while 101 collapsed last year.

Pandemic puts mental health on everyone’s agenda

The FT considers the mental health issues around the coronavirus pandemic and resulting lockdown, with Anna Purchas, head of people at KPMG, highlighting issues around increased instances of domestic violence.

Firms allowed to hold online AGMs

The Department for Business, Energy and Industrial Strategy and Financial Reporting Council have announced that companies will be allowed to hold their annual shareholders’ meeting over the phone or online during the coronavirus pandemic.

Business Minister Alok Sharma last month vowed to propose legislation that would enable firms to hold their annual meetings while maintaining social distancing and without breaching curbs on non-essential travel.

Guidance issued on Friday details that shareholders will only have the ability to vote by proxy at virtual meetings and also outlines that firms will not have to make hard copies of AGM notices and other documentation available.

Police smash tax refund crooks

Police have smashed a criminal gang that has been offering fraudulent tax refunds during the coronavirus pandemic. Officers raided several addresses, seizing mobile phones, SIM cards and computers linked to text message scams and emails.

The criminals sent correspondence purportedly from HMRC telling recipients they were eligible for a tax rebate or “payment” designed to support those without a job or people on reduced wages, with links to fake websites designed to access the person’s bank details, passwords and card numbers.

Meanwhile, HMRC has warned of text messages falsely claiming that recipients can apply for coronavirus tax rebates, saying it has detected 54 financial scams related to COVID-19 since March 23 and has asked internet service providers to remove 227 web addresses.

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