Economic revival under way – business news  31 July 2020.

31 July 2020.

James Salmon, Operations Director.

Economic revival is under way in the UK, personal insolvencies jump, virus concern keeps staff at home, prompting exodus from office space, new rules on redundancies, covid-19 and market news and a lot more.

Here are CPA we want to  share the business news stories we have seen that we think will affect our members and readers. Many of us are busy fighting to protect our businesses and therefore might have missed some of the news that could impact small businesses, their owners and those that sell on credit.

Economic revival under way

Guardian analysis suggests that Britain’s economy has begun to repair the damage from the coronavirus lockdown.

Its monthly tracker of economic news shows that while the hardest-hit sectors of the economy remain under severe pressure, the easing of lock-down is enabling business activity and retail sales to return to close to pre-pandemic levels.

However, Howard Davies, the chairman of NatWest Group, has warned that the recovery could stutter as government support is gradually removed. He said: “We cannot assume the spending recovery we have seen so far will persist into the autumn. There is a risk that the prospect of job losses will dampen spending.”

The analysis by the Guardian focused on eight economic indicators, with its findings showing that GDP returned to growth in May, while retail sales climbed by 13.9% in June.

However, the report also cites an Office for Budget Responsibility estimate that the unemployment rate, currently at 3.9% , may double before year end, while Resolution Foundation research suggests the average household has seen the biggest hit to its finances since the 1970s.

Personal insolvencies jump 7% in second quarter

Personal insolvencies jumped 7% in the second quarter of 2020, according to the latest reports.

Government statistics show there were 32,153 individual insolvencies in the three months to June following a rise in Individual Voluntary Arrangements (IVAs). However, the figures were slightly lower than analysts had predicted and also revealed a significant fall in company insolvencies due to state support schemes.

The figures also showed that bankruptcies dropped by around 40% to 2,415 in the quarter, while debt relief orders were also substantially down.

The Insolvency Service said this was “likely to be a least partly driven by Government measures put in place in response to the coronavirus pandemic”. Despite the economic revival, insolvencies that have been delayed by government intevention will eventually come and cause a future increase.

Meanwhile, business insolvencies decreased dramatically as firms were kept afloat by Government support measures in the aftermath of the crisis.  The number of corporate insolvencies decreased by 33% to 2,974 in the second quarter, compared with the same period last year.

Maxime Lemerle, director of sector research at credit insurance company Euler Hermes, said: “Today’s data is rosier than many would have dared predict at the start of the quarter. However, the UK economy is facing a ticking timebomb in terms of insolvencies on the horizon.”

Colin Haig, president of restructuring trade body R3, said: “Despite the fact we’ve had the lowest quarter for corporate insolvencies since 2010, now is not the time to be lulled into a false sense of security. We have not seen the full impact of Covid-19 on businesses because of the lifeline the Government’s support has provided. What we do have an idea of, however, is the impact of the pandemic on the economy, and we know it has been disastrous.”

As many businesses are seeing activity tick up during the economic revival, many others have simply kicked the insolvency can down the road with the help of the governments interventions. The resultant unemployment of these insolvencies will have an impact on those firms that have been recovering and cause a real threat to the economic revival.

(See our story earlier this week on Zombie Companies)

Virus concern keeps staff at home

The Telegraph’s Judith Woods considers today on page 21 how fears over COVID-19 have prompted some firms to extend work from home policies, despite lockdown measures being eased, noting that KPMG is among those that have suggested offices will not be up and running again until 2021.

For staff, the savings on commuting costs are like getting a payrise, Not to mention the savings on snacks and lunches. Staff also appreciate having more family time, at least some do.  While for some the isolation has caused its own problems, others have found the better work/life balance has helped them reassess and improve their mental health and improved their work focus.

Home-working shift set to prompt office exodus

Landlords and property agents believe a mass exodus from offices may be on the cards, with the coronavirus lockdown driving a remote working revolution. A survey by the Royal Institution of Chartered Surveyors (Rics) has seen nine in ten agents and landlords say they expect companies to scale back on office space in the next two years, with rents set to decline as firms opt for smaller, cheaper sites. The poll shows that more than half of respondents expect more businesses to base themselves in suburban offices rather than city centres. Rics said office rents are likely to fall by between 4% to 7% in the next 12 months, while the dip in demand could see retail rents decline by up to 14%. Rics economist Tarrant Parsons comments: “The recent shift into remote working raises many questions across the office sector, with respondents expecting businesses to re-evaluate their office space requirements over the next two years.”

BT offers support to small firms

BT is to offer subsidies and bursaries to small businesses, with its Small Business Support Scheme offering a subsidy of £2,500 to fund the cost of ultrafast business connections for entrepreneurs and tech start-ups. The telecoms firm has also pledged to pay its 4,500 smaller suppliers within days of being invoiced. BT chief executive Philip Jansen, who described small businesses as “the beating heart of the UK economy”, said that as the country looks to emerge from the coronavirus crisis, the economic recovery “hinges on their survival and ability to grow.” “If small businesses fail, our wider economy will fail to rebound,” he added.

Furloughed staff payoffs to be based on full wage

As of today, furloughed workers losing their jobs will see redundancy pay based on their normal wages as opposed to the furlough rate. The change will apply to redundancy payments, statutory notice pay and other entitlements. Business Secretary Alok Sharma remarked: “It is important that employees receive the payments they are rightly entitled to,” continuing: “The Government is doing everything it can to protect people’s livelihoods.” This comes as experts predict that the number of people made redundant during the coronavirus crisis, which currently stands at around 150,000, will rise, especially once the furlough scheme ends in October. TUC General Secretary Frances O’Grady welcomed the move, saying paying people full redundancy “is the right thing to do”, but called on ministers to extend the furlough scheme, arguing: Without this, we risk an avalanche of redundancies in the autumn.”

Covid-19 general news

Global cases reached 17.3 million, with deaths over 673,000.

A surprise announcement on Twitter saw the Government reimpose lockdown restrictions across a large part of northern England, affecting 4 million, citing a lack of adherence to social distancing,and a spike in cases with people no longer able to meet indoors with members of other households.

Countries have made “a deep underinvestment in public health infrastructure,” said Mike Ryan, head of the World Health Organization’s Health Emergencies Program. Ryan said he was surprised by countries’ unpreparedness for the contact tracing and testing that would be necessary. If he could change anything, Ryan said he’d have the WHO offer more technical assistance to countries it had assumed would be more ready to face the challenges.

Test results published in scientific journal Nature, suggested a covid-19 vaccine made by Johnson & Johnson,elicits a “robust” reaction in tests on primates. Phase 3 clinical trials on humans are yet to begin.

In Denmark borders with Sweden were opened again  even as Swedes were implored to carry on working from home.

In  Spain, the virus is spreading at the fastest pace since April. In France, the infection rate has almost doubled in weeks.

Argentina posted a record daily increase of 6,377 new cases, bringing the country’s total to 185,373.

India’s death toll climbed to 35,718, surpassing fatalities in Italy, the former European epicenter of the epidemic.

Texas virus deaths set a new record for the second day in a row, rising by 322 to 6,274 Thursday

Tokyo suffered record new infections and an emergency may be declared if the situation worsens.

US cases rose 1.9% to 4.47 million


The FTSE 100 fell 2.3% yesterday mirroring falls in Europe where the EuroStoxx 50 fell 2.8%. Overnight the  S&P 500 dropped -0.38% and the NASDAQ rose 0.43%. The pound broke above 1.30 US  dollars and straight on to above $1.31. Sterling  also rose against the Euro to 1.107 after data showed the US economy shrank by 32.9% in the second quarter and Germany reported a decline of 10%, which was worse than expected.  Oil Prices fell as rising global covid cases hit expectations on fuel demand globally. Gold also fell despite the US dollar, weakness as analysts reported resistance to the $2000 milestone. Big tech had a big night, as Apple Inc., Inc. and Facebook Inc. all jumped in after-hours trading following positive earnings results and forecasts following their grilling by congress.

GDP in the USA contracted at an annualised rate of 32.9% in the three months to the end of June, as a surge of new covid-19 cases weighed down the economy. That is the worst such figure since the figues began after the second world war  as new USA unemployment benefit claims rose to 1.43m last week.

Germany’s second-quarter GDP figures shrank by 10.1% quarter-on-quarter in the three months to June, the worst decline recorded since reunification in 1990.


Avoiding a bloodbath on the UK high street

The FT today looks at support measures the Treasury is considering for high street retailers, noting that an online sales tax and rethink of business rates have been mooted.

HMRC targets wealthy in push on tax evasion

HMRC has targeted “the wealthiest and most sophisticated” tax evaders, launching 430 investigations into serious and complex evasion in 2019/20 – a 26% increase on 2018/19 and 65% up on 2017/18.

IHT receipts see first dip in a decade

HMRC figures show that the money raised from inheritance tax fell for the first time in a decade last year. The 2019/20 tax year saw the Treasury pull in £5.2bn in IHT, with this £223m down on the inheritance tax take for the previous year, marking a 4% decline. HMRC said the introduction of the residence nil-rate band in the 2017/18 tax year was the main reason IHT receipts – and number of people paying the tax – fell last year. With Chancellor Rishi Sunak reportedly looking at ways to raise cash to cover the nation’s coronavirus bill, Mike Hodges of Saffery Champness suggests non-doms could become a target if IHT bands or rules are changed. He added that while those with non-domicile tax status “will likely be considered a safe target politically”, Mr Sunak “will need to be mindful to not throw the baby ou t with the bathwater” with such individuals providing a significant source of investment in the economy. Tom Elliot of Crowe adds that if the Treasury is considering an annual wealth tax, “this would provide the perfect opportunity to not just reform IHT but do away with it completely.”

FRC tells auditors to be more sceptical

The Financial Reporting Council (FRC) says accounting firms should show more professional scepticism when dealing with clients. Its enforcement review for the 2019/20 financial year found that firms continue to show too little independence when checking the books of listed companies. It also found examples of auditors delegating too much work to junior staff, disorganised paperwork, and a failure to gather sufficient evidence to support reports. Elizabeth Barrett, the FRC’s executive director of enforcement, said: “Failure to exercise professional scepticism is an ongoing issue,” adding: “Whilst we have seen examples of good behaviours, it is disappointing that, overall, the response has been mixed.” The FRC, which has increased its enforcement unit by 14%, resolved a record number of cases by “constructive engagement” last year as the regulator focused on engagement rather than enforcement action. Data show fines handed t o company auditors fell, with nobody banned from the profession. The FRC says the engagement path allows cases to be dealt with quickly and cheaply. The FRC opened 88 cases in the 2019/20 financial year, up from 46 in the previous year, handing out fines totalling £16.5m. Ongoing FRC investigations include probes into KPMG’s audits of Carillion, Grant Thornton’s audits of Patisserie Valerie and EY’s audits of Thomas Cook.

Don’t let Covid-19 bust your business!

It will if your cash flow dries up, either sooner or later.

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 sometime to come.

CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. Above all tactfully, because maintenance of goodwill is paramount.

To meet the needs of creditors in the current crisis, we have designed a “critical care” package especially tailored for the situation.

  • The annual package costs start at very low rates
  • A minimum performance warranty is provided
  • Several complimentary services included

Clients instruct CPA on-line via their PC or phone, completely user-friendly. Your late paying customers are told to pay you direct (not to us).

A very recent report shows a 23% increase in the number of unpaid invoices since March 11th THIS YEAR – are you getting a build-up of late payers?

 Right now, overdue accounts must be a concern and CPA has a great track record of encouraging slow-payers to pay their suppliers quickly.

It takes less than 17 minutes to see how you would benefit, do you have the time now?

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.

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 to aid your economic revival, 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 for economic revival.

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 to support your economic revival .  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