Late payments threaten survival of SMEs – Business news 25 October 2021

James Salmon, Operations Director.

Late payments threaten survival of SMEs.  Rising tax burden hurts SME outlook.  Small businesses mull work-from-home plans to save on energy bills. And more business news.

Late payments threaten survival of SMEs
The Small Business Commissioner Liz Barclay, working with the organisation Open Banking Excellence, has revealed that firms are under threat of being put out of business because £23.4bn of invoices have not been paid since January. Late payments threaten survival of the SMEs who are the key to the economic recovery.

Ms Barclay warned late payments threatened the very survival of some businesses. She suggested that payment practices should perhaps be included in ESG measurements to help push a cultural shift in approach.

Rising tax burden hurts SME outlook
Confidence among small businesses has been shaken by increases in National Insurance contributions and dividend taxes, according to the Federation of Small Businesses (FSB), while inflation fears are also denting optimism. The higher tax burden will cause companies to curtail hiring and pare down investment, the FSB said. Mike Cherry, the lobby group’s national chairman, said: “As things stand, the planned hike to NICs – which serve as a job tax – will see firms with even less room to manoeuvre when it comes to investment, recruitment and reskilling, while leaving many with no choice but to raise prices.”

Small businesses mull work-from-home plans to save on energy bills
Research from Smart Energy GB, a smart meter company, found that 30% of small businesses are considering plans to force staff to work from home over winter to pass on the cost of soaring energy prices. Some 62% of small businesses are worried about rising energy costs and whether it will affect their ability to operate over the winter.

Inflation and interest rate signal

The Bank of England new chief economist has warned that UK inflation is likely to hit or surpass 5% by early next year. Huw Pill said that the Bank would have a “live” decision to make at its next interest rate-setting meeting on 4 November. It follows recent comments from Bank of England governor Andrew Bailey who said it “will have to act” on inflation.

Services drives economic growth
The UK economy picked up speed again in October with IHS Markit’s flash composite purchasing managers’ index hitting 56.8 for the month, up from 54.9 in September and the highest reading since May. Growth was driven by the services sector, whose activity outpaced manufacturing output by the widest margin since 2009.

Chris Williamson, IHS Markit’s chief business economist, said the recovery, “is looking increasingly dependent on the service sector, which in turn looks prone to a slowdown amid the recent rise in COVID-19 cases.” He added: “Growth is also being accompanied by an unprecedented rise in inflationary pressures, which will inevitably feed through into higher consumer prices in coming months.”

Adam Hoyes, assistant economist at Capital Economics, commented: “Overall, the PMI survey suggests our expectation of GDP stagnating in October may be a bit too pessimistic and increases risk that the Bank of England will hike interest rates in the coming months.”

Retail sales fall again
Figures from the Office for National Statistics show retail sales fell 0.2% in September. Although this was down on the 0.5% rise predicted by analysts, sales are still 4.2% higher than they were in February last year, before the first lockdown.

However, it is the sixth month in a row that retail sales volumes have now fallen, marking the longest period of consecutive monthly falls since the series began in February 1996. If the 2.9% increase in fuel sales is excluded, retail sales were down 0.6% on the month.

Bethany Beckett, economist at Capital Economics, said: “The 0.2% month-on-month fall in retail sales volumes in September offers more evidence that the economic recovery is fast running out of steam. Given the backdrop of continued shortages and rising COVID-19 infections, we suspect that retail sales growth will continue to be weak in the coming months.”

Christmas threatened by further Covid measures
With consumer confidence fragile, retailers are concerned that any return to Covid restrictions would hurt their most profitable season. The pandemic has already seen several high-profile names exit the high street and Paul Martin, retail analyst at KPMG, says: “We are already seeing a few profit warnings in the market, and this is likely to continue after Christmas, with rising insolvency levels also expected as government support tapers off and costs continue to bite.”


The European Union is considering the nuclear option of terminating the post-Brexit trade deal if the U.K. government pulls out of its commitments over Northern Ireland and fresh negotiations fail. Prime Minister Boris Johnson has threatened to unilaterally suspend parts of the Northern Ireland Protocol, using the powers granted in Article 16 of the pact. European officials have been discussing the need to prepare a powerful response. The loss of the limited trade deal with Europe would be a major disruption to the UK economy.

Small UK businesses consider insolvency to escape state Covid loans
Analysis by Begbies Traynor indicates that small businesses are increasingly looking at pre-pack insolvencies as a way to escape “toxic debt” built up over the pandemic

Threat to more energy suppliers
The surge in natural gas prices could see Britain’s home energy market contract to just eight suppliers, according to consultant EY-Parthenon, down from 45 at the start of the year. Last week Scottish Power’s chief executive Keith Anderson warned that as many as 20 suppliers could go bust over the next few weeks. EY’s report said: “We expect the number of energy suppliers to consolidate to 8-10, given October’s limited price cap increase and the prospect of continued high gas prices.”

Recruitment woes may last for years
Widespread staff shortages have been fuelled by the loss of 900,000 workers from the labour market during the pandemic, new research reveals. The Learning and Work Institute warned shortages may last years after large numbers of people retired and foreign-born workers left the UK, the latter accounting for a third of the drop. The institute recommended boosting retraining and support aimed at helping parents and disabled people back into work.

Majority of UK employers plan to hire over next 12 months
A survey by the recruitment firm Hays has found 80% of employers are planning to take on more staff over the next 12 months. Recruitment intentions are the highest in eight years due to the quick rebound in the economy, existing skills shortages, and in some areas workers returning to the EU as a result of COVID-19 restrictions and Brexit. Some 67% of employers who are hiring are looking for permanent staff, while a third are recruiting for temporary positions; and 28% are hiring for roles which are fully remote. Simon Winfield, managing director of Hays UK & Ireland, said: “Almost every employer is facing the same challenges in finding the skills they need, and we’re seeing areas of real demand in technology, construction, engineering, and marketing, where employers can’t hire quickly enough.”

Sunak could raise minimum wage to £10 an hour
News that the Chancellor will announce an increase in the present £8.91 minimum wage rate in Wednesday’s Budget has led some observers to speculate that Rishi Sunak could push it as high as £9.50 to make up for the £20 cut in Universal Credit for 3.2m working families. That could put him on course for £10.50 minimum pay by 2024 with the qualifying age lowered from 25 to 21 to overtake Labour’s pledge of £10 an hour.

Furlough scheme cost taxpayers nearly £100bn
Figures published by the Office for National Statistics on Friday reveal the Government’s furlough scheme cost taxpayers £69bn over an 18-month period. The bill rises to £97bn when grants to the self-employed are included.


HSBC unveiled a $2 billion share buyback after reporting a rise in third-quarter profit driven by additional credit provision releases. Pre-tax profit increased by $1.0 billion to $1.5 billion year-on-year while revenue rose 1% to $12 billion. Expected credit loses (ECL) were a net release of $0.7 billion, compared with a $0.8b billion ECL charge in 3Q20, reflecting ‘continued stability in economic conditions and better than expected levels of credit performance.’


Oil rose this morning, extending pre-weekend gains, with US crude hitting a seven-year high as global supply remained tight amid strong demand worldwide as economies recover from pandemic-induced slumps.


Gold hovered close to the key $1,800 level earlier, supported by a weaker dollar as investors assessed how the US Federal Reserve could respond to inflationary pressures after its chair said inflation could last until well into next year.

Country house market sees strongest annual growth since 2007
Knight Frank’s latest Prime Country Index reveals the annual rate of growth for country homes hit 10.6% in September – its highest level since the first quarter of 2007. Chris Druce, senior research analyst at Knight Frank added: “After a remarkable period of activity some of the heat has come out of the country market as we move into autumn. However, the return to normality will likely be a slow process with demand still significantly outstripping supply, a situation that is unlikely to improve significantly until next spring.”

Sunak warned against crashing UK economy ‘onto the rocks’
Former Brexit minister David Davis has warned that the course being taken by the Chancellor will drag Britain’s economy on to the rocks, accusing Rishi Sunak of not being the Thatcherite he claimed he was. Raising taxes is not the solution to ballooning Government debt, Mr Davis said, adding: “Together, high taxes and high inflation create a growing spectre that threatens our post-pandemic recovery.” Mr Davis also hit out at plans to raise corporation tax from 19% to 25%, saying they will “lead to less investment”.

Patriotic Millionaires call for Sunak to tax wealthy
An open letter to the Chancellor, Rishi Sunak, from 30 UK millionaires calls for higher taxes on the rich because they can afford to pay it, and says the recovery from the pandemic should not be paid for by “care workers, street cleaners and teachers.” They point to the Pandora Papers as more evidence that a two-tiered tax system benefits rich and powerful people. “There are many of us – people with wealth – who will support a more progressive system of taxation, and we urge you to do the same,” the group, which is part of the Patriotic Millionaires movement, said in the letter. “When deciding on how to meet the financial gap, look to us. Repairing our country is more valuable than growing our wealth.”

HMRC to crack down on podcasters and social media influencers
HMRC is to launch a crackdown on gamers and podcast hosts who it suspects are hiding their earnings. “Individuals have a responsibility to report their taxable income to HMRC – there are no special rules for social media influencers,” HMRC said. The Times notes that HMRC has the power to demand information about the incomes of users of platforms such as Twitch and Patreon, both of which describe the money people can give to content creators as “donations”. Bethany Brooke, a manager at the tax advisory firm RSM, said: “The term ‘donation’ is misleading. They may assume that donations aren’t taxable. It isn’t a charitable endeavour, it’s payment for producing entertainment. On that basis, any ‘donations’ received by the creators would typically be fully taxable and subject to national insurance contributions.”

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 charge our members a fixed annual subscription irrespective of how high the debt value is!

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.

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.