Pessimism surrounds family finances.

James Salmon, Director, 23/5/2019. Updated 07/06/2019

Pessimism surrounds family finances.

See our earlier post – Three in ten British adults’ personal finances go into the red

An IHS Markit survey shows that although unemployment is at record lows and wages are increasing, Britons are feeling more pessimistic about their finances than at any time since September 2017.

The indicator shows household sentiment fell to 42.5 this month, down from 43.8 in April.

The index, which measures overall perceptions of financial wellbeing, has been struggling below the 50 mark that signals a positive outlook for several months. IHS Markit said people reported a marked increase in living expenses during May, and concerns were high regarding job security.

Inflation Rises

Meanwhile Inflation increased to its highest level last month, according to the latest figures by the Office for National Statistics (ONS), going up to 2.1% from 1.9% in March. The rise is thought to have been caused by higher energy bills, but has been offset slightly by package holiday and computer games prices.

Electricity and gas prices rose from 9.3% in March to 10.9% in April this year. Air fares also rose pushing up the inflation figures. The Bank of England said earlier this month that it was expecting inflation to pick up over the next two years, predicting it would rise to 2% in April.

The price growth is likely to frustrate household finances even more.

Pound falling

The British Pound found fell to its weakest point since early January after Theresa May suffered another Cabinet resignation by Andrea Leadsom (the 21st minister to leave the cabinet over Brexit) ahead of what are expected to be a failed vote on her deal and disastrous European Parliament elections for the ruling Conservative party. With May expected to resign soon after the results of Thursday’s vote are announced, Sterling is edging back toward the depths it hit in the months following the Brexit referendum in 2016.

The Brexit worries have seen the pound fall against the US dollar from almost $1.32 earlier this month to around $1.26 today and against the Euro from almost €1.18 to almost today €1.13.

British consumers are going to find there cash isn’t going to go as far as they are used to as they set off for their summer holidays.

Also those expensive items made overseas are going to continue to face upward price pressures.

Young people grow more pessimistic

A new survey from Deloitte suggests millennials across the world are feeling more gloomy than before, with climate change and income inequality their top concerns.

Only a quarter expect the global economy to improve, compared with 45% last year, while only a fifth expect the social and political climate in their countries to improve, down from 33% in 2018.

Brexit & politics

Britain’s political system will be shaken once again during Thursday’s European Parliament elections, with challenger parties expected to thrive.

Nigel Farage’s Brexit Party, born only in January, has stormed the contest, polling around 37%. Hardcore Remainers have flocked to the Liberal Democrats, whose pithy slogan of “Bollocks to Brexit” helped power them to second in the polls on 19%—their best performance in almost a decade. Labour, whose fudging to avoid upsetting either Remainers or Leavers has impressed neither, clings to third place at around 13%.

The fringe Green Party could poll ahead of the Conservatives for the first time in a national vote. Fifth place for the Conservatives would be unprecedented for a governing party in a European election. Such a performance may be enough to finish Theresa May, the unpopular and increasingly beleaguered prime minister.

British Steel

The collapse of British Steel is also hitting confidence as it points to the economic dangers of a no-deal Brexit and the threat to UK jobs.

British Steel was liquidated after it failed to reach agreement with the government on a multi-million-pound loan to cover its operating expenses. The company was bought by Greybull Capital in 2016 for a pound, but says it has been brought down by Brexit, which has hit its European orders. Around 5,000 British Steel workers will lose their jobs.

Universal Credit hardship

Meanwhile an MPs’ committee has been told of the extreme hardship being inflicted on women by Universal Credit.

Women are increasingly forced to take up sex work to get money for food and rent after becoming desperate over financial hardship caused by universal credit.

A series of witnesses from specialist charities that work with women involved in prostitution told MPs on the work and pensions committee there was a strong link between benefits changes and so-called “survival sex”.

“What we are told time and time again by women we are supporting is that they are getting involved in sex work because of issues within universal credit,” said Laura Seebohm of the Changing Lives charity.

Update 07/06/2019. One in five struggle with rent or mortgage

A report for the Affordable Housing Commission suggests that a fifth of households are struggling to afford their rent or mortgage. This equates to 4.8m households – marking an increase of more than 500,000 since 2010.

One in ten go cashless

The latest UK Payment Markets report from UK Finance shows that one in 10 adults are living a largely cashless life, with this climbing to 17% among those aged 25 to 34.

Last year, four in 10 payments in the UK were made by debit card, reflecting the popularity of contactless cards. It was also found that almost half of UK adults used mobile banking in 2018, up from 41% the previous year.

At the same time, the number of bank payments made using online or mobile banking in 2018 grew to 2bn, up from 1.6bn in 2017.

Additionally, an estimated 8.5m people were registered to buy goods and services using mobile payment services such as Google Pay, Apple Pay and Samsung Pay.

A total of 39bn transactions were made in the UK last year by businesses and individuals, the report said, with 34.9bn by consumers and 29.7bn of these spontaneous, rather than scheduled payments.

Business isn’t doing any better

Those businesses selling to consumers are going to be affected by the above issues as British consumers tighten their purse strings and cut back on discretionary spending.

Businesses that import goods into the UK are also going to be affected by the falling pound.

Businesses that are operating on credit are going to be hit too by the rise in inflation.

And this is already affecting many UK businesses as some of our recent posts highlight:-

more retail CVAs predicted

Begbies Traynor shows UK companies are in significant financial distress

KPMG give Zombie company warning

Are you owed money by an affected business?

With pressures on the personal finances and UK businesses rising it is essential that you stay on top of the credit limits you grant and watch carefully for any late payments.

You can’t just assume your customers can and will pay you, 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.

See the section below – About CPA.

Are you also at risk of collapsing?

If you are struggling like the above, rather than thinking about shutting down, do you realise you may have a hidden source of capital within your business waiting to be activated?

If you trade with other businesses and were often paid late then you could be entitled to significant compensation.

Under little known and underused legislation your business could be due huge amounts in compensation that you didn’t even know about.

That compensation could be the cash rescue your business needed.

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 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 companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.

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 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 cashflow.

Don’t let your bankers control you, contact CPA today.

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.

visit our late payment compensation page

See our full blog and FAQ on late payment compensation

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 to retailers or other at risk sectors, 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 you 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.

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!

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