Global debt surging to ‘unmanageable’ levels – Business news 26 June 2020.

26 June 2020.

James Salmon, Operations Director.

We cover the IMF’s warning on global debt, covid-19 and market news, the car industry, the minimum wage, commercial rents, calls on tax, more insolvency news, the wirecard fallout, pay freezes and a lot 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.

Covid-19 general news

The Government set out details allowing fairs, outdoor markets and on-street drinking and dining to take place without planning permission in England this summer. The government unveiled a new Business & Planning Bill, which will lift the red tape from pubs, restaurants and hotels to serve food & drink on streets and in car parks to boost the UK economy.

However the health secretary Matt Hancock has warned he could close beaches to head off a potential new round of infections after mad scenes at places like Bournemouth this week.

The government says that local lock-downs could be be used to deal with further outbreaks of Covid-19 in England.

Texas abruptly halted its lifting of lock-down , after a 4.8% surge in covid-19 cases. The number of people hospitalised there has more than doubled since early June. 29 of the US states are reporting rising rates of infections.


The FTSE 100 climbed 0.38% to 6147.1 yesterday and the 250 was up 0.23%. Markets in Europe climbed over 1% which was mirrored in the US where the NASDAQ and S&P500 rose 1.1%.  Traders were initially nervous about the rise in covid cases but gave way to confidence in the ECBs move to provide a new backstop facility to provide loans to other central banks.

Investors seem to be counting on policy makers to cushion any blow from the pandemic.

NEW US unemployment figures came in at 1.48m when the consensus was an increase of 1.32m

IMF: Global debt surging to ‘unmanageable’ levels

The International Monetary Fund has warned that businesses and households alike are facing catastrophe, after racking up “unmanageable” debts during the severe recessions triggered by COVID-19.

The IMF’s gloomy financial stability assessment added that a likely surge in insolvencies will “test the resilience” of the banking industry, despite widespread efforts to prop up balance sheets since the 2008 crash.

It added: “Some banks have already started to provision more for expected losses on their loans… This is likely to continue as banks assess the ability of borrowers to repay their loans, while also accounting for the support that governments have given households and companies”.

It also said that an ongoing disconnect between financial markets and the “real” economy could lead to a correction in asset prices.

Car industry

New data from the Society of Motor Manufacturers and Traders showed UK Car Manufacturers produced only 5,314 vehicles in May as output stalled for the second consecutive month due to covid-19. Despite two-thirds of car plants restarting work last month, output was severely impacted by social distancing requirements and a lack of demand.

Business groups call for delay to minimum wage increase

Several influential business groups are calling for a delay in the next minimum wage increase in the UK to help companies rebuild their finances after lockdown. Tom Ironside of the British Retail Consortium said: “In recent years, retailers have worked hard to increase pay, with many going beyond the legal requirement. However, with many retailers struggling to maintain viability in the face of the continued crisis, it is not the right time to be adding even greater pressure to an industry that already operates on very fine margins.” The Institute of Directors is also considering pushing for a delay, and the Food and Drink Federation said that members were being polled on the issue. Matthew Fell of the Confederation of British Industry would not say if the organisation intended to lobby against an increase to the minimum wage. Alice Tranter of Make UK warned that if the minimum wage continued rising at its current rate, it would hit &poun d;11.03 by 2024 – equal to an annual salary of £21,221 for anyone older than 21.

Commercial landlords receive just 18% of rent

Initial figures from Wednesday’s quarterly payment date reveal commercial landlords were paid just 18.2% of what they were owed, compared with 24.3% on the March payment day. According to Re-Leased, 22.8% of rent owed for office space was paid; 16.2% for industrial space; and 13.8% for retail space. Melanie Leech, chief executive of the British Property Federation, said: “Early indications are that our warnings to Government about the impact of their moratorium on evictions leading to businesses refusing to pay their rent have proved justified. There is no excuse for office occupiers not to meet their legal obligations, and even in the retail and hospitality sectors at the sharp end of this pandemic, we know that there are well-financed tenants who can pay their rent but are choosing not to do so.”


Tescos said its sales for the first quarter were up almost nine per cent in the UK, as shoppers stocked up on essentials and hunkered down during the pandemic. Underlying sales in the UK rose 8.7 per cent in the 13 weeks to the end of May, reaching £9.9bn. It maintained its outlook on profit, saying that it expects income for the full year to be more or less the same as in 2019/20 as capital expenditure rises in tandem with sales.

New “phased approach” to digital tax proposed

A letter sent to Steven Mnuchin, US treasury secretary from finance chiefs from the UK, France, Spain and Italy. offers to weaken a proposed digital tax so just “automated” digital technology companies would be targeted to begin with, such as Google and Facebook. E-commerce companies like eBay and Amazon would be looked at later. The move comes after the US argued a digital tax would “unfairly target” American companies and officials warned it could scupper a post-Brexit trade deal between the UK and the US.

IFS: VAT cut would help spark recovery

A report from the Institute for Fiscal Studies (IFS) backs calls for the Chancellor to introduce a temporary cut in VAT when he unveils a mini-Budget next month. The think-tank says cutting VAT would have a double benefit for the economy by “putting money in people’s pockets” immediately and encouraging consumers to bring forward spending. However, Rishi Sunak should also consider that the move might be more effective later in the year. Separately, the FT’s Chris Giles calls on Chancellor Rishi Sunak to introduce a temporary lower rate of VAT on pubs, restaurants, hotels and tourist attractions, dropping it from 20% to 5%.

Sports Direct and Arcadia on HMRC hit list for Covid cash

HMRC is mulling probe into Mike Ashley’s retail empire Frasers Group following complaints that staff were asked to work despite being on furlough. A source said Sir Philip Green’s Arcadia was also on a “hit list” of companies suspected of breaking the rules: “We’re already looking into whether we can claw back some Covid cash from them. If there’s any way we can, we will. So far it’s looking like there is a case for both to answer.”

Fifty per cent of accountants feel CBILS process is ‘too long’

Around 50% of accountants feel that the Coronavirus Business Interruption Loan Scheme (CBILS) application process and the time it takes to get a response is “too long”, according to a new survey from adviser-led funding platform Some 50% of accountants also suggested that insolvency and recovery, dispute resolution and company valuations will be a key feature of their work in the coming six months. The research also showed 90% of the accountants surveyed confirmed that they have helped their clients access CBILS over the past few months, with 65% confirming they are not charging an additional fee for the service.

Intu “90% certain” to fall into administration

Sky News reports that hopes creditors would give shopping centre owner Intu Properties space to restructure its finances appear to have been almost completely extinguished ahead of today’s deadline. Intu, which is saddled with £4.5bn of debt, put KPMG on standby earlier this month to plan for an insolvency process. KPMG said without a £12m injection from creditors it would not be able to run an orderly administration process and some centres would subsequently have to close for a period. Intu’s shares have fallen almost 90% during the last year and it has a market cap of just £52m.

Wirecard collapses into insolvency

German payments company Wirecard has filed for insolvency after disclosing a $2.1bn (£1.6bn) financial hole in its accounts. EY refused to sign off on Wirecard’s 2019 accounts because of the missing cash. The company said in a statement yesterday that it faced “impending insolvency and over-indebtedness”, and that its “management board has come to the conclusion that a positive going concern forecast cannot be made in the short time available”. Following this statement, EY said there were “clear indications that this was an elaborate and sophisticated fraud, involving multiple parties around the world in different institutions, with a deliberate aim of deception”, adding that “even the most robust and extended audit procedures may not uncover a collusive fraud”. The collapse is a disaster for Germany, which has been trying to push Frankfurt as an alternative finance hub afte r Brexit. Regulator BaFin faces reputational damage too after pushing back on claims made about Wirecard for two years. Whether or not Wirecard’s UK subsidiary, Wirecard Card Solutions, will be insulated from the disaster remains open to question, the Times’ James Hurley reports. Meanwhile, the FT notes that UK and US hedge funds are sitting on more than €1bn of profits gained over the past week after betting against Wirecard.

Wirecard critics faced hostilities for years

Matthew Earl, the managing partner of ShadowFall Capital & Research, explains in a piece for the Telegraph some of the problems he identified at Wirecard as far back as 2015. Mr Earl, who along with journalists from the Financial Times and others, was targeted by private investigators after a rash of allegations were made. Earl points to various suspect deals Wirecard conducted including one probed by KPMG which found hundreds of millions of euros were sent to a Mauritian fund as payment for an Indian company called Hermes I-Tickets without knowing who the fund was ultimately owned by, suggesting basic anti-money laundering procedures weren’t applied. Wirecard paid €326m for Hermes in 2015 one month after it was sold to the fund for €35m. The company reported revenue of only €4.5m in 2015. Separately, the FT lays out the timeline of the Wirecard scandal detailing yet more spurious activities .
The Daily Telegraph Financial Times

Wirecard an illustration of why auditing is broken

A piece in Fortune blames the collapse of Wirecard on auditors at EY, who “should have been asking the tough questions journalists were posing” as early as July 2015. The article’s author, Jeremy Kahn, notes that fines issued by the UK’s Financial Reporting Council rose in 2019 following what Kahn calls “serious deficiencies” across the sector.

XpertHR survey reveals pay freezes on the rise in UK

Human resources data provider XpertHR has revealed the results of a survey showing that 15% of pay deals at UK employers in the three months to the end of May featured no increase in wages. XpertHR pay and benefits editor Sheila Attwood commented: “Across the private sector, alongside the many organisations delaying a decision on their annual pay review, the number reverting to a pay freeze is increasing.” She went on: “With the potential for redundancies looming, frozen or reduced pay is likely to be used as a way to minimise the number of job losses.”

Triple lock could see pension rises outstrip wage growth

The Resolution Foundation has said with the pensions triple lock in place the cash value of the UK state pension will increase by 7.6% between 2020 and 2022, compared with a 1.5% rise in wages. The warning comes amid speculation Chancellor Rishi Sunak may be forced to suspend the policy to help pay for the coronavirus rescue. While the “aim may be laudable, the policy itself is a mess and needs to be replaced,” said Laura Gardiner, the foundation’s research director. “Such a large increase is particularly hard to justify when it will be working-age families feeling the greatest pinch from Britain’s jobs crisis.”

Former Redcentric bosses face prosecution following FCA probe

The Financial Conduct Authority (FCA) is to bring criminal proceedings against three former Redcentric executives following a long-running investigation into the company. Redcentric provides managed IT services to public and private sector customers and in 2016 announced that it had overstated its assets by £13m and its profits by £9.5m. The Financial Reporting Council (FRC) probed the affair leading to auditors PwC being fined £4.6m. Two of the firm’s partners were fined a combined £280,000 and issued with severe reprimands by the watchdog. Redcentric has enjoyed a return to growth under the new leadership of Peter Brotherton.

The EY way is ethics

EY ’s Global Integrity Report found 12% of senior executives would be willing to take a bribe while 90% thought COVID-19 disruption posed a risk to ethical business conduct.


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, 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