Business news 5 December 2022

James Salmon, Operations Director.

Ministers launch the “Payment and cash flow review”. SMEs inject festive cheer with wary eye on the year ahead. One in eight firms see disruption from October strikes.  And more business news.

Ministers launch the “Payment and cash flow review”

The Government is launching a review into the slow and late payment of small company debts – The “Payment and cash flow review”.

Business Secretary Grant Shapps is launching the payment and cashflow review to “unshackle small businesses” from “exploitative” payment practices by large companies.

The Government says small firms have over £23.4bn currently owed in outstanding invoices.

Ministers say the review will “scrutinise existing payment practices and the measures in place to make sure small firms are not ripped off by their larger clients.” The review will look at the Prompt Payment Code, the rules that force large companies to disclose compliance, and the role and powers of the newly appointed Small Business Commissioner – Kevin Hollinrake.

While the Government vowed to tackle the problem of outstanding invoices following a consultation that closed in 2020, there has been little action. Public policy has been stagnant for years and the review is little more than kicking the can down the road again.

Hollinrake acknowledged the need to support small businesses grow. The UK tops the table in the OECD for small business startups! However, those businesses are choked and inhibited and we rank only 13th for slightly larger businesses.

Tackling the late payment culture in this country is key to helping our small businesses focus on growth.

CPA would question the need for a review.  We don’t need more consultations, we don’t need to kick the can down the road. We need action now. And the answers have already been pointed out.

Businesses will delay payments to boost their cash flow as long as it is the cheapest and most effective way to do it. Why borrow from a bank or other traditional source of finance, when you can “borrow” from your suppliers for free without penalty?

CPA has called for higher compensation levels to be set for late payments, with the current levels set decades ago and eroded by inflation. Hit big companies in the wallet and they will change their practices. Make late payment a very expensive way to boost cash flow and big business will stop using it and access cash elsewhere.

CPA has also called for the toughening up of acceptable payment terms which are often set high by big companies who have all the power in the negotiations.  Why do businesses need to be able to insist on holding payment for sixty days after goods or services have been supplied? The only reason is to boost their cashflow at the expenses of their suppliers.

SMEs inject festive cheer with wary eye on the year ahead

Research commissioned by Barclays reveals just over two-fifths (41%) of small businesses will shut down operations entirely between Christmas and New Year giving employees an extra 2.5 days of annual leave. Around a quarter will hand out Christmas bonuses to staff and 44% will host a party. However, looking forward, 68% of small firms are concerned about the negative impact of rising energy bills and 47% report worries about their business prospects for next year.

Colin O’Flaherty, at Barclaycard Payments, said: “While it’s been another challenging year for businesses, many SMEs are looking to inject some festive cheer by rewarding employees, as business owners are aware of the positive impact morale can have on staff retention. Our research, however, shows that although owners are very aware of the difficulties to come, they remain resilient in the face of rising costs.”

One in eight firms see disruption from October strikes

One in eight British companies suffered disruption from strikes which affected public transport, postal services, telecoms and other sectors in October. Analysis from the Office for National Statistics (ONS) shows that 13% of businesses reported some kind of impact from industrial action, with the most common issue involving firms being unable to access goods or services. Small business and those in the retail and construction sectors were the hardest hit.

Next rescues fashion chain Joules
Clothing chain Joules has been rescued from administration by retailer Next and founder Tom Joule in a £34m deal. Next will take a 74% stake in the business, with Mr Joule owning the rest. Next has bought the majority of Joules’ assets, including paying £7m for the retailer’s head office, and says the chain would retain “management autonomy and creative independence.” Next intends to keep about 100 Joules stores open and save 1,450 jobs.

Record returns after Black Friday
Online retailers have had record volumes of goods returned after the Black Friday shopping weekend, according to ReBound, which specialises in clothing returns. While Barclaycard Payments shows that Black Friday and Cyber Monday sales were up 3.2% on last year, ReBound said returns were 8.4% higher in the week after Black Friday than a year ago. Laura Garrett of ReBound said: “How quickly after Black Friday that we saw the big spike come in is quite a surprise,” adding: “Normally it would take 12 days and we would expect it to occur towards the end of the first week of December.” Noting that returns across November are “already significantly higher than last year,” Ms Garrett said the pace of post-Black Friday sales is “indicative of people being much more precious over their money and wanting their refunds back really quickly.”

A third of people hope to set up a company
A poll by the Association of Accounting Technicians (AAT) shows that almost a third of people have either started their own business or aspire to do so in 2023, with the rate jumping to more than half of people in London. Almost a fifth of respondents in the capital said they want to generate their own income, while 14% want to start a business so they have something of their own. One in 10 Londoners said they feel trapped in their job. Across the UK, 19% of people believe starting a business is the only way they will see career progression. However, nearly one in 10 are put off starting a business by tax and accounting matters. It was also found that one in five do not think accountancy skills are important to start a business. An AAT poll of 500 small business owners also found that the top three mistakes when starting a business are poor understanding of the target market (30%), cash flow management (19%) and ignoring technology (19%).

Prices could fall by a fifth, says Rightmove founder
Rightmove founder Harry Hill expects a slump in the housing market that could see prices fall by up to a fifth. Saying that he is “nervous” about a “potentially deep recession” and how the economy would emerge.

CBI warns that UK is about to fall into year-long recession

The latest economic forecast from the Confederation of Business Industry predicts Britain’s economy will shrink 0.4% next year as inflation remains high and companies put investment on hold. The expected 0.4% fall in GDP is a downgrade from its previous forecast of 1% growth set in June. Business investment is expected to slump by 9% below pre-Covid pandemic levels by the end of 2024.

CBI director-general Tony Danker warned: “[Companies] see potential growth opportunities, but a lack of ‘reasons to believe’ in the face of headwinds are causing them to pause investing.” To combat this, the CBI called on the Government to make Britain’s post-Brexit work visa system more flexible and give greater tax incentives for investment. “We will see a lost decade of growth if action isn’t taken. GDP is a simple multiplier of two factors: people and their productivity. But we don’t have people we need, nor the productivity,” Danker said.

Britain’s factories already in recession

Britain’s factories are already in recession, despite the S&P/CIPS manufacturing PMI survey showing a slight increase in November. While the index rose to 46.5 last month from 46.2 in October, the survey remained far below the 50 point threshold that separates growth and contraction. This marked the fourth consecutive month where British manufacturing activity fell. The PMI suggests that businesses are cutting spending on manufactured goods as they brace for a slowdown in consumer demand.

Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, comments: “Demand for industrial goods likely will be hit again early next year as real incomes are squeezed by the watering down of government support for energy bills and higher unemployment, as businesses are forced to consolidate costs.” The PMI also indicates that factories are pulling back on hiring plans and may even be considering reducing the size of their workforces. Manufacturers cut jobs for a second month in a row – and at the fastest pace since November 2020. The report also shows that export orders fell at the fastest pace since May 2020.

BoE policymaker in recession and rates warning
Bank of England rate-setter Swati Dhingra has warned that higher interest rates could lead to a deeper and longer recession. Ms Dhingra, who last month called for half-percentage-point increase in interest rates while most of her colleagues opted for a 75 basis-point increase to 3%, said the Bank could deepen an expected recession if it pushed up borrowing costs further.

Health and wealth divides in UK worsening

A new report from the IPPR will this week show economic inactivity because of sickness is at its highest level since records began, with 2.5m working-age adults inactive due to their health. The regional divide is getting worse too, the research found, with sickness twice as likely to force people out of work in the north-east of England, Wales and Northern Ireland as in London and the south-east. A total of 10.8% of the Northern Irish population are too ill to work, compared with 4.4% in the south-east. The UK average is 6.1%.

Chris Thomas, the head of the commission on health and prosperity at the IPPR and the author of the report, said: “The evidence is ever clearer: a fairer country is a healthier country, and a healthier country is a more prosperous country. Yet we are getting sicker and poorer as a country – with deepening health inequalities undermining national prosperity, particularly in the north and the devolved nations.” He continued: “If the Government truly wants to level up the country, it needs to do far more to make better health a keystone of the UK’s economic recovery. Better health is the best and clearest route to better lives, fairer economics, and greater prosperity for us all.”

Why should you become a CPA member!

The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid, since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for some time to come.

CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. And we provide credit information so you can monitor and assess your key customers.

Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the debt value maybe!

No face-to-face meeting required – just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email today.

When you see your money come in, you will be so glad you used CPA.

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


Do you have a commercial late payer that is causing you grief? Use CPA’s no-win, no-fee, commercial debt recovery service!

If you have a particular business customer who is late paying and causing you sleepless nights, why not offer it to CPA for purchase on recourse?

CPA’s collection department will then pursue the debt. We will be liable for any costs incurred and then when we have recovered the debt, we will pay you the net principle debt recovered less our percentage.

Once you have enjoyed that success then you can consider the more cost effective membership which includes our Overdue Account Recovery service and Status/Credit reports as well as a range of other complimentary services.

Just call  020 8846 0000 and ask for Godfrey Nelson or Cris Shirley (business hours) or email today.

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


Get compensated for previous late payments

Have you been paid late by business customers in the last six years?

Maybe you no longer work with them. Under legislation, you are entitled to  compensation you for those late payments you have suffered.

You put up with the PAIN – now claim the GAIN!

Claim late payment compensation (LPC) from former business customers who paid you late in the last six years!

CPA (LPC) Recoveries is using our bespoke software and decades of experience to do just that for our clients

Check our compensation calculator to see how much your business could be owed!

Discover NOW the potential value of late payment compensation hidden in your sales ledger!

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