SME Growth business news 20 August 2020.
20 August 2020.
James Salmon, Operations Director.
We look at the latest signs of SME growth returning, inflation, working habits, a doom loop, teenagers, covid-19, markets and other business news
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.
SME growth up in July
A study from NatWest shows that over a third of SMEs reported growth in July, up from 10% in April, while the number of smaller firms shrinking fell from more than three-quarters in April to under 30% last month.
Stephen Blackman, principal economist at NatWest, commented: “It’s welcome news that, like the economy overall, small businesses sentiment and activity improved sharply in July”. He also said there should not be too much read into “slight relative underperformance” compared to recovery among bigger companies, as “the gap should narrow”.
UK SMEs outperform Q2 expectations, and are cautiously optimistic for Q3 revenue rebound
Barclaycard Payments has released its quarterly SME Barometer with YouGov, which has found that SMEs outperformed their Q2 expectations and are cautiously optimistic for a Q3 revenue rebound.
SMEs reported, on average, a 14 per cent decline in revenue in Q2 compared to Q1; less severe than the 28 per cent drop predicted
Optimism has jumped 16 points, showing that businesses are feeling more positive about the future
Barclaycard Payments data for the first half of Q3 shows the average daily value of SME transactions is up 60 per cent compared to the daily average for Q2
SMEs are preparing for recovery, with four in five planning to invest over the next 12 months – up from two thirds last quarter
Barclaycard Payments’ quarterly SME Barometer reveals small and medium businesses have exceeded their revenue predictions for Q2. At the start of April, SMEs predicted a 28 per cent decline for the quarter, but now that Q2 is in the books, the research reveals the average reported loss of 14 per cent was less severe than predicted.
Stronger-than-expected Q2 performance has led to a boost in optimism, with index scores jumping from 79 out of a possible 200 points at the start of Q2, to 95 points at the start of Q3. This is also reflected in business outlook – 36 per cent of SMEs report a positive outlook for their own business this quarter, up from 21 per cent in Q2. Across all sectors, SMEs predict a five per cent increase in revenue for Q3 compared to Q2, which grows to 14 per cent over the next 12 months.
Sectors that rely on consumer card payments, such as hospitality and leisure, were hit particularly hard in Q2, and many were not able to re-open safely until the start of Q3. Fortunately, these sectors appear to be recovering well – Barclaycard SME transaction data for the first half of Q3 has shown consistent week-on-week growth, and the average daily transaction value has risen by 60 per cent compared to the daily average for Q2*. However, card transactions for the first half of Q3 remain 13 per cent behind the same point last year*, indicating card-taking SMEs have a way to go to match their pre-pandemic performance.
The percentage of SMEs reporting coronavirus negatively impacted their business has dropped this quarter, falling from 82 per cent in Q2 to 74 per cent this quarter. While the pandemic continues to cause disruptions, with 60 per cent of SMEs expecting it to have a significant impact until at least the end of September, the future looks more positive – that number drops to just 13 per cent by this time next year.
SMEs are also proactive in their own recovery – 80 per cent plan to invest over the next 12 months, with new equipment & technology (32 per cent) and marketing (28 per cent) the greatest focus.
Rob Cameron, CEO, Barclays Payments, says, “SMEs are once again proving their resilience and securing their role at the heart of the UK economy, especially in the face of the challenges posed by coronavirus. Despite uncertainty and business disruption, SMEs are outperforming their own revenue expectations and beginning to look to the future by returning to work and thinking about investment.
“We welcome these signs of growth and optimism – and hope that SMEs continue to take advantage of the support available, whether from finance partners or the Government, in order to continue this recovery.”
The return to ‘normal’ for SME employees
The biggest change SMEs have implemented to mitigate the effects of coronavirus is reducing staff numbers (26 per cent), which rises to 47 per cent amongst medium businesses.
The top benefit of coronavirus reported by SMEs was also related to staffing – with a third (33 per cent) welcoming the opportunity to improve remote working capabilities.
Many SMEs can see life returning to how it was before coronavirus, with 42 per cent expecting a return to ‘normal’ at some point, and a further 31 per cent saying that the reason they won’t return to normal is because they have made small changes and improvements that they intend to keep.
Similarly, many SMEs have already started to return to their offices, with 21 per cent reporting that employees worked on the premises throughout lockdown, while 22 per cent began encouraging a safe return to work when easing began in July. Just over one in ten (11 per cent) have revealed they will be moving to a permanent working-from-home model and not asking employees to return to the office.
Emma Jones, founder of Enterprise Nation, says, “We’ve seen SMEs begin to emerge from lockdown in a place of strength – a huge testament to their resilience and their willingness to seek and take advice. It’s heartening to know that the Government support measures and resources have helped our nation’s small businesses during the pandemic.
British industries see growth outpace global average
Lloyds Bank analysis of IHS Markit’s business surveys shows that many British industries are growing faster than competitors around the world, outpacing the global growth average. The report shows growth above the global benchmark in 12 of the 14 industries tracked.
Inflation up, ONS figures reveal
Office for National Statistics figures show that inflation rose last month, with the consumer prices index (CPI) at 1% in July, up from 0.6% in June. The climb was driven by an absence of traditional summer sales and an increase in petrol prices as oil prices rebounded from lows seen earlier in the year.
Jonathan Athow, deputy national statistician for economic statistics at the ONS, also noted an increase in prices for private dental treatment, physiotherapy and haircuts. Jai Malhi, strategist at JPMorgan Asset Management said of the data: “At this stage we doubt this will prevent the Bank of England (BoE) providing further support to the economy. But if these upside surprises continue it may add some hesitancy.”
Ed Monk of Fidelity International said the figures showed that economic life was “getting back to normal” but pointed to BoE forecasts that prices could fall in August, while Howard Archer, chief economic adviser to the EY Item Club, said consumer price inflation “looks set to fall back appreciably in August”.
The BoE has said the CPI is unlikely to recover to its 2% target until 2022.
On the economy, Ian Stewart, chief economist at Deloitte, said: “We are in a disinflationary world of abundant spare capacity, rising unemployment and weak pay growth.” The Retail Prices Index for July, a measure of inflation that also dictates annual train fare increases, also rose last month, climbing to 1.6% from 1.1% in June. This is set to see rail travel prices rise by 1.6% in January.
PwC: Offices are a refuge for some staff
PwC says younger workers are increasingly returning to the office to seek refuge from working in shared homes or to increase social contact. UK chairman Kevin Ellis said: “We employ thousands of young people, some of whom are perhaps struggling to work with limited space in shared flats, or who are just starting their careers and are looking for the in-person experience of working.” PwC staff are returning to the office at a rate of around 1,000 a week, with many visiting offices for meetings or specific tasks, rather than to work traditional nine-to-five, five day-a-week shifts. The firm says that 8,000 staff are currently using company premises. PwC expects all of its 22,000-strong workforce to return to the office eventually, with most splitting time in the office with remote working.
Economic ‘doom loop’ could see tax hikes
Allister Heath in todays Telegraph warns that the economy could be “sucked into a catastrophic doom loop” of higher taxes and permanently low growth. He argues that “savage” tax increases seem almost inevitable and voices concern that pro-growth tax relief “will never materialise”, pointing to Boris Johnson’s leadership campaign in which he spoke of raising the threshold for the higher income tax rate to £80,000. Mr Heath says the while he is sure the Prime Minister “would still love to” cut taxes, efforts to balance the books post-coronavirus are likely to see “anti-growth tax increases in a desperate, counter-productive scramble for cash.” On possible tax action, he notes a manifesto pledge to not raise income tax, VAT or national insurance, suggesting CGT and pensions tax relief may be targeted.
Teens unimpressed by traditional professions
A survey of 3,000 teenagers aged 16 to 18 suggests careers in law, medicine and accountancy do not appeal to the majority, with more than half deeming a career in the professions, engineering or teaching as outdated. The survey, commissioned by Samsung, also found that 71% were not interested in following in their parents’ footsteps and entering the same profession. The most appealing roles for Generation Alpha were social media influencer, which was cited by 72%, followed by app developer (68%), video game developer (62%), smart home designer (54%) and 3D prop designer (48%). On the kind of working life they expect, it was found that half of the youngsters polled would turn down a job if they could not work from home.
Teenagers set to access fund money
As of next month, the first batch of teenagers to benefit from Child Trust Funds (CTF) will be able to access the money. Since 2002, around 6.3m CTF accounts have been set up, with 4.5m opened by parents or guardians and 1.8m set up by HMRC. September will see the oldest people with accounts in their name turn 18, with 55,000 accounts set to mature each month. HMRC has created an online tool that will help the teenagers – or their parent or guardian – find and access the account.
Covid-19 general news
Global cases exceed 22.4 million and deaths pass 787,600
France has reported its biggest increase in new covid cases since early May, before the country emerged from an almost two-month lockdown.
Spain, meanwhile, has re-emerged as the epicenter of the coronavirus pandemic in Europe after recording the highest number of daily infections per million people in the continent over the course of this week with 3,715 new cases reported on Wednesday, almost half of which were found in the vicinity of Madrid.
Germany recorded more than 1,000 new cases for a third consecutive day
Swiss pharmaceutical group Roche announced plans to link up with US biotech company Regeneron to develop a Covid-19 antibody.
Markets.
The FTSE spent most of yesterday tracking sideways although the index closed circa 0.5% higher after a late rally.
Still, the UK and most of Europe remain firmly in the shadow of soaring US equities that from an index perspective have recovered to Pre-Covid 19 levels. In fact the S&P 500 has now staged its fastest ever bear market rally led by the likes of Apple which has become the worlds first $2 Trillion dollar company, doubling in value in just over two years.
The hope for investors in UK markets is that our rally is yet come. The FTSE 100 is still 22% below highs. The problem is we don’t have the digital tech giants like Google, netflix, microsoft, facebook, amazon and apple that have clearly been the beneficiaries of the lock down and the movement of so many activities online.
Airbnb filed papers with American regulators to launch an initial public offering.
BREXIT
As negotiations resumed on post-Brexit trade this week, fishing remains a key area of disagreement with it being a red line for both sides. . Fishing is a tiny industry, making up less than 0.1% of British GDP and accounting for just 12,000 jobs however politically for Brexiteers it is impossible to imagine as a sovereign country agreeing to give up access to our waters.
KPMG sets out Intu administration plan
KPMG has set exit out strategies from administration for shopping centre owner Intu, including a CVA or a creditors’ voluntary liquidation. KPMG has realised cash of £151m and said it anticipated that a dividend will be available for unsecured creditors, but that the “level of return and timing of any distributions to unsecured creditors is currently uncertain”. The total cost of the administration is estimated at £100m, with £89m to be charged to the property companies which control the individual assets. The Telegraph notes that KPMG is due to earn £16m for its handling of the administration.
MPs urge Chancellor to act on loan charge
The Loan Charge All Party Parliamentary Group (APPG) has written to Chancellor Rishi Sunak, calling for ministers and HMRC to offer a “genuine and reasonable” settlement opportunity for those who used loan schemes. They argue this will allow many people to reach affordable settlement while also enabling HMRC to collect some of the tax it claims it is owed. The APPG has also called for the Loan Charge declaration point to be pushed back from the end of September to the end of January 2021, opening a six-month window for voluntary settlement agreements to be agreed. Sir Mike Penning MP, co-chair of the APPG, said that the group opposes the retrospective nature of the loan charge and believes taxpayers should have the right to access the legal process, “but there also needs to be a conclusion to this issue to allow people to get on with their lives.”
Court ruling could see IHT rules overhauled
A Supreme Court ruling has clarified pension and inheritance tax rules, overturning a Court of Appeal decision that backed HMRC’s stance that certain pension transfers could be hit with a tax bill. The debate centred on a case involving the extent to which gratuitous benefit rules mean pensions transferred in ill-health are subject to IHT. HMRC had argued that pensions transferred to someone else within two years of death can be caught by IHT if the owner was known to be in ill health. Tom Selby, a senior analyst at AJ Bell, said that if the 2018 Court of Appeal decision had been upheld, DC pension transfers would have been at greater risk of being hit with a tax charge where the member died within two years of a transfer where the primary motivation was to change provider or reduce annual charges. He added that the case “exposed the complexity and confusion” that exists around pensions and IHT, arguing that the “common sense solution to this complexity would be to remove pensions from IHT altogether.”
Prices slipped 0.2% in March and April
Office for National Statistics (ONS) figures show that house prices fell 0.2% month-on-month in April, taking the average property value to £234,612. The data also show that growth fell to 2.6% in the year to April, with year-on-year growth of 3.5% having been recorded in March. The index, which is released jointly with the Land Registry, has not been published since May, with the coronavirus lockdown having seen the property market all but shut down. The ONS says the April data does not reflect the impact of coronavirus on the market as the figures used are based on completed house sales, which can take up to two months to go through. Reflecting on the housing market, Howard Archer, chief economic adviser to the EY Item Club, said an increase in the stamp duty threshold and a post-lockdown release of pent up demand could push up prices and activity in the near term, but he suspects “the upside for the housing market will be limited due to challenging fundamentals for consumers.”
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 nsm@cpa.co.uk 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
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