SME owners hit hard by Covid stresses – business news 21 October 2020.
James Salmon, Operations Director.
SME owners hit hard by Covid stresses, the deficit rises to highest level in 60 years, inflation, negative interest rates, covid-19, market 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 owners hit hard by Covid stresses
New research from Santander reveals that a third of small business owners say working through the pandemic has negatively affected their mental health while two in five are questioning whether they want to continue running their business due to the pressure COVID-19 has created.
Four in 10 women said the pandemic had impacted their mental health, compared to less than a third of men.
If you are a B2B business owner and suffering from Covid stresses, CPA can help you. Either through our credit management services or by uncovering a hidden source of capital in your accounting records by helping you discover the late payment compensation you are due.
These services are discussed lower down on the page.
Highest deficit in 60 years
The budget deficit climbed to an unprecedented 208.5 billion pounds in the first six months of the fiscal year, due to the cost of supporting the economy through the covid pandemic as yet more calls mount for fresh aid. Borrowing in September alone was 36.1 billion pounds, the Office for National Statistics said Wednesday. This beat the median forecast of economists which was 33.6 billion pounds.
Data from the Office of National Statistics that showed that the ratio of National debt to gross domestic product (GDP) was now at the highest level since 1960 at 103.5%. T
The ONS said that while public sector net borrowing was estimated at £36.1 billion in September, it must be noted that borrowing is trending below the Office for Budget Responsibility’s £372.2 billion annual forecast.
Inflation
UK Inflation climbed to 0.5% in September, from 0.2% in August. The Consumer Prices Index began rising more quickly in September after the Eat Out To Help Out scheme ended, pushing up restaurant and cafe prices. Transport costs also went up as demand for second-hand cars increased in the period.
BoE: Negative rates may be needed to boost recovery
Gertjan Vlieghe, a member of the BoE’s MPC, has indicated that negative interest rates could soon be needed to boost the economy as the second COVID wave hits the recovery.
Mr Vlieghe said that in countries where negative rates have been tried, “the effect has generally been positive”.
The BoE has taken interest rates to a record low of 0.1% and used QE to inject more money into the system and lower rates in financial markets. However, Mr Vlieghe said that “QE is probably less potent now than in March”, which meant the Bank needed to consider other options including taking rates below zero.
“There is a tremendous challenge ahead. Given that virus prevalence has been increasing again recently, it is likely to weigh more heavily on economic activity. Indeed, it appears that the downside risks to the economic outlook are starting to materialise,” Mr Vlieghe said. “In my view, the outlook for monetary policy is skewed towards adding further stimulus. My own view is that the risk that negative rates end up being counterproductive to the aims of monetary policy is low.”
Experts say pre-pack reforms are ‘flawed’
Government plans to tighten scrutiny of connected-party pre-pack administrations have been hit with criticism after draft regulations show the opinion of multiple “evaluators” could be sought by dealmakers, leaving the system open to abuse, according to the Insolvency Service.
Colin Haig, president of R3, the trade association for insolvency professionals, said this meant that “effectively anyone will be allowed to provide an independent opinion on a connected party pre-pack sale, which risks abuse of the system that undermines the entire rationale of these reforms”.
Gender and ethnic disparities affect business outcomes
A study by the British Business Bank and consultancy Oliver Wyman argues that black and female business owners face “persistent disparities” in outcomes when compared with white male counterparts with ethnic and economic background, gender and geography having a “profound” effect on business outcomes.
Education, deprivation, access to finance and under-representation in senior positions in the workforce explain these disparities in part, but systemic disadvantage “also appears to play a role”, the report added. Roianne Nedd, global head of diversity at Oliver Wyman, said: “What should be a level playing field is littered with obstacles.”
Although the report was welcomed by Tom Adeyoola, an entrepreneur who campaigns for equality in access to finance, he said he was “disappointed that there are no recommendations for any interventions”.
Covid-19 general news
Global cases top 40.7 million and deaths exceed 1.1 million as 333,724 cases were added on 20th October. The sharp increase in case numbers continued as the UK added 21,331 new cases, bringing the total to 762,542.
The U.S., India and Brazil however, account for more than half of all global cases.
The Government will move Greater Manchester into Tier three on Friday, against the wishes of the local mayors as talks broke down . South Yorkshire are also moving into tier three from Saturday.
Sadiq Khan has called for the 10pm curfew to be scrapped in a bid to save London’s ailing hospitality industry. The mayor of London said the curfew made no sense now that household mixing was banned indoors as a part of the latest Tier 2 restrictions.
A pre-departure rapid Covid-19 testing facility has been launched at Heathrow Airport in London. From Tuesday, the facilities in Terminals 2 and 5 will initially offer tests to passengers traveling to Hong Kong and Italy before they fly.
Germany’s new cases rose by 8,523, the highest level since the pandemic began. Italian cases rose to 10,874.
It is “completely unrealistic” to expect a Covid-19 vaccine to be widely available by the end of this year, and most people probably won’t have access to a shot until the second half of 2021, Severin Schwan, CEO of Swiss pharma giant Roche Holding AG, warned on Tuesday.
Brexit
European officials are working hard to come up with a trade deal with the UK that will give the appearance of a political win for Johnson and avoid the threat of a no deal brexit. They interpret the PMs posturing as an attempt to sell the potential deal to Euro skeptics within his party.
The House of Lords has voted against Boris Johnson’s Internal Market Bill, which seeks to breach the Brexit withdrawal treaty if the UK does not get a trade deal with the EU. The Lords approved a motion to regret the bill on the grounds that it “would undermine the rule of law and damage the reputation of the United Kingdom”.
Markets.
The FTSE 100 was up 0.1% yesterday as the 250 rose 0.4% as some encouraging quarterly reports won out over covid stresses. The S&P 500 rose 0.47% amd the NASDAQ rose 0.33%. THe dollar is trading weaker as US politicans move towards a new stimulus deal. Asian Markets were mixed as investors continued to watch for developments on US stimulus talks.
Banking industry could establish new debt collection agency
UK Finance is conducting a feasibility study into the creation of a new agency to manage the collection of overdue government-backed bounceback loans. The new body would reduce pressure on banks to collect debt and could bring a more consistent approach to borrowers, according to the Times.
Sunak told self-employed won’t survive tax rises
With the Chancellor currently drawing up plans to plug the hole in Britain’s finances, Rishi Sunak has been warned that many contractors will not be able to survive if they are forced to pay more tax, with many having received no support at all during the coronavirus pandemic. Derek Cribb, the head of the Association of Independent Professionals and the Self-Employed, says Mr Sunak will find it difficult to sell the idea that the self-employed should pay more tax to “fill the coffers that have been emptied out into other people’s pockets”. However, the University of Oxford’s Professor Judith Freedman backs the idea of aligning the taxes of self-employed workers with normal employees arguing that the tax system was a poor way of rewarding risk. Ms Freedman also believes the tax base should be broadened by making pensioners pay national insurance. “I don’t think it will be popular but I think it probably should be done ” she said.
Think tank outlines proposals to avoid tax hikes
The Centre for Policy Studies (CPS) has called for the pensions triple lock to be scrapped as part of a nine-point plan to repair the public finances. The think tank also proposes cuts to the aid budget and child benefit to be further limited as part of £30bn worth of spending cuts designed to spare the UK from post-Covid tax increases. Land and other state assets should also be sold. The head of policy at the CPS, Alex Morton, said: “Taxes are already at historic highs, and any further increases risk choking off any post-Covid recovery. The Government must re-examine its existing spending and ensure it is getting good value before considering raising tax further still. This package of savings is simultaneously radical but realistic – delivering better value for money for voters and allowing the Government to continue funding its priorities.”
Google
The US government has filed charges against Google, accusing it of abusing its dominance to preserve a monopoly over internet searches and online advertising. The lawsuit marks the biggest challenge brought by US regulators against a big tech company in years, since the departmnet of Justice took on Microsoft in 1998.
Netflix
The streaming king fell yesterday after it shocked investors by only adding 2.2 million new subscribers in the last quarter instead of the 3.3 expected by analysts.
Metro Bank
Metro Bank had grown its loan book in the third quarter, driven by government-backed lending to small business. Loan volumes in the three months through September increased to £15.09 billion, up 2% compared to the first half and up 1% year-on-year. Deposit volumes of £15.62 billion were flat compared to the first half, but up 10% year-on-year.
BDO resigns as Poundstretcher auditor
BDO has resigned as auditor from Poundstretcher after reviewing its client portfolio and assessing the “commercial risk and reward associated with the audit of the company”. BDO issued a warning in March over a cashflow forecast prepared by directors stating that uncertainty due to a lack of evidence for the prediction meant there “could be both material and pervasive” undetected misstatements in the financial accounts. The budget retailer appointed KPMG to explore restructuring options at the end of March and creditors agreed a CVA in July. A spokeswoman for Poundstretcher said the group had appointed a new auditor, which “it feels better suits the statutory requirements and the ongoing needs of the company”.
Don’t let Covid-19 bust your business!
Don’t succomb to covid stresses. You 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.
You put up with the PAIN – now claim the GAIN!
Now you can boost your own cash-flow. You can find relief from Covid stresses
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.
Did you know that your business is entitled to a minimum of £40 for every commercial invoice paid late to you over the past 6 years?
How many of your invoices are paid late each month – 20, 50, 100 or more?
At £40 per invoice that’s claim of £57,600, £144,000, £288,000 plus interest. The more invoices the bigger the claim!
At £100 per invoice it’s £144,000, £360,000, £720,000 plus interest.
For over 20 years, CPA has calculated and recovered Late Payment Compensation on behalf of Clients!
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.