Business news 28 August 2023
James Salmon, Operations Director.
SMEs hit by late payments. Energy Price cap coming down. Interest rate hikes wipe £15bn off UK builders. Rates need to remain high. Small firms call for expansion of PM’s business council. And more business news that we thought would interest our members.
SMEs hit by late payments
Nearly two-thirds of small businesses say late payments from clients are affecting their ability to pay contract workers on time, according to specialist lender Sonovate.
The proportion of SMEs that have problems paying their staff on time had risen from 50% last year, with this stemming from cash flow problems caused by late payments from their customers.
Sonovate’s research also found that 38% of SMEs take more than 90 days to pay their contractors, up from 27% last year.
Almost a third (31%) of SMEs have lost contract workers due to not being able to pay them promptly, while 51% said that they had missed out on talent because of payroll issues.
The Credit Protection Association (CPA) has been assisting thousands of UK businesses who are hit by late payments to get paid, since 1914. 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 offer our members a fixed annual subscription regardless of how high the debt value maybe!
If you are being hit by late payments, 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.
Energy Price cap coming down
Ofgem’s new price cap means the annual energy bill for a household using a typical amount of gas and electricity will fall to £1,923 in October. This is £151 lower than current rates and £577 less than last winter. Warning that volatility in the market means customers cannot be offered long-term certainty, Ofgem chief executive Jonathan Brearley said: “We know people are struggling with the wider cost of living challenges and I can’t offer any certainty that things will ease this winter.” With Citizens Advice calling for more targeted government support for those who need it most, Mr Brearley said that social tariffs for lower-income households should be considered as a future option. Prime Minister Rishi Sunak said ministers “want to make sure the most vulnerable in our society do get help, even when prices are coming down.”
Interest rate hikes wipe £15bn off UK builders
Analysis shows that the Bank of England’s interest rate rises have stripped more than £15bn off the value of the UK’s largest housebuilders. While shares in Barratt have dropped 40% since the Bank started increasing rates in December 2021, Taylor Wimpey and Berkeley have declined by about a third and 17% respectively. Persimmon, meanwhile, faces demotion from the FTSE 100 index after losing nearly two-thirds (64%) of its value. David O’Leary, executive director at the Home Builder Federation, says: “The challenging economic picture coupled with an increasingly anti-growth, anti-business policy environment is putting tremendous strain on the homebuilding industry.” Data shows that 4,280 construction firms went bust in the year to June. This marks the fastest rate of insolvencies in a decade and is 16.5% higher than a year ago.
Rates need to remain high
Deputy governor Ben Broadbent says the Bank of England will have to keep interest rates high for longer as inflation will not fall as quickly as it climbed. He told the Federal Reserve’s annual gathering of central bankers that it is “unlikely” that second-round effects will “unwind as rapidly as they emerged.” He added: “As such, monetary policy may well have to remain in restrictive territory for some time yet.” Mr Broadbent also said that headline inflation will fall “over the next few months” and living standards will start to improve. The Bank has raised rates to 5.25%, the highest level in almost 16 years, as it looks to tame inflation. While the rate of price growth has dropped from a peak of 11.1% peak to 6.8%, it is still far exceeds the Bank’s 2% target.
Small firms call for expansion of PM’s business council
SMEs have called on Prime Minister Rishi Sunak to expand his Business Council to better address the needs of small companies. The council, which includes chief executives from 14 companies, was set up to improve relations and break down barriers. However, small business leaders argue that the challenges faced by small businesses are often different from those faced by large companies. In a letter to Mr Sunak, leaders including Tina McKenzie, national policy chairwoman of the Federation of Small Businesses, and Neil Davy, chief executive at Family Business UK, said: “The interventions you make on behalf of those large corporates won’t necessarily work for smaller firms.” They have urged the Mr Sunak to include small business representatives in the council’s meetings or to meet with them separately, emphasising the importance of the Government and business working together. Downing Street says the Prime Minister regularly meets with SME leaders to hear their views
Small businesses urge Treasury to scrap tourist tax
Small businesses have called on the Treasury to scrap the tourist tax in order to attract international visitors back to the UK’s retail sector. The Federation of Small Businesses has urged the government to reinstate tax-free shopping for tourists, which was abolished in 2021, arguing that that tax-free shopping would not only benefit small businesses but also boost secondary spending in restaurants, bars, and tourism.
Jackson Hole
Federal Reserve Chairman Jerome Powell said the central bank will continue to raise interest rates “if appropriate.” While US inflation hit 3.2% in the year to July, the Fed has a target of 2%. As it looks to bring price rises down, it has lifted the key interest rate to 5.25%, with 11 consecutive rate rises taking it a 22 year high. Mr Powell said: “Although inflation has moved down from its peak – a welcome development – it remains too high.” Noting that officials are “prepared to raise rates further if appropriate,” he added that the Fed would “proceed carefully.”
HMV owner makes Wilko rescue bid
Doug Putman, the Canadian entrepreneur who owns HMV, has put forward a bid to rescue the discount retailer Wilko, with a proposal that could save 350 stores and 10,000 jobs. An earlier offer from Mr Putman – which would have seen him take on 200 stores and save 4,000 jobs – was rejected because debt holders could recoup more from a break-up of the business. While Mr Putman is believed to have been in talks with Wilko’s administrators at PwC for at least two weeks, his previous offers could not match the cash raised from liquidating the chain’s assets, including its leaseholds and stock. Andy Prendergast, national secretary of the GMB union, has called for Wilko’s 12,500 employees to be prioritised, saying: “Working people’s livelihoods should not be treated like chess pieces – to be traded off against the interests of the wealthy.”
Doug Putman has approached a number of debt providers to back his bid to rescue Wilko, reportedly sounding out firms including Gordon Brothers and Hilco. City sources believe that a rescue of Wilko by Mr Putman is “unlikely” but note that the matter remains under discussion with PwC, the retail chain’s administrators. If his efforts fail, Wilko will be broken up, with 150 stores sold to Poundland and B&M. Most of the remaining business will be liquidated. The Range is said to be in pole position to acquire Wilko’s brand and online operations.
Private equity firm eyes Wilko rescue
Private equity firm M2 Capital has made a £90m bid for retail chain Wilko, which fell into administration earlier this month, putting 12,500 jobs and 400 stores at risk. M2 says it would guarantee all employees’ jobs for two years if its bid is successful. Andy Prendergast, national secretary of the GMB union, said that while “the devil is always in the detail… any bid that guarantees jobs has to be prioritised.”
Pizza Hut’s future in doubt
Pizza Hut’s UK business has been hit by a debt crisis, with the chain in negotiations to refinance tens of millions of pounds due to be repaid to lenders in April. Bosses have been forced to seek revised terms on its debt as soaring prices have pushed the company further into losses. Auditor PwC has warned that Pizza Hut UK faces a “material uncertainty which may cast significant doubt about the … ability to continue as a going concern.” Pizza Hut must repay £31m of its £73m of debts in April 2024. The business has been loss-making for the last two years and was £16.5m in the red in the year to December 2022.
Voters favour public services funding over tax cuts
Voters think ministers should prioritise funding for hospitals, schools, and policing over tax cuts, according to a poll for the Times. The majority of people (54%) believe it is unrealistic for the Government to cut taxes in the current economic climate, while 25% said it could be done. The sentiment was even stronger among Conservative voters, with 63% considering tax cuts unrealistic.
CBI issues etiquette guidance
The Confederation of British Industry (CBI) has issued new guidance for events in the wake of sexual misconduct allegations that threatened the business lobby group’s existence. The CBI has introduced strict codes of conduct for staff to observe in the office and at networking events it hosts. These include ‘principles’ around alcohol consumption and drug use – which is banned – and creating a “safe and secure working environment.” The group says it will not tolerate “actions that will have a detrimental effect on our reputation, violate the law, impact the safety of others or cause inappropriate conduct.” The guidelines also say the group “will not tolerate bullying, harassment or sexist, racist, or exclusionary comments or jokes.” The CBI has also introduced clear ways to report a complaint if its principles are breached.
£600k needed for a comfortable retirement
People need to build a pot of nearly £600,000 to enjoy a comfortable retirement, according to Interactive Investor analysis. The rising cost of living requires an extra £4,200 a year to maintain the same lifestyle as in April 2022, with workers needing to save another £69,000 to generate that amount of annual income. The report shows that those with a minimum pension income will need 61% more private pension income compared to last year to keep up the same living standard. They will also need more than £23,000 more in their pension pot. Alice Guy, head of pensions and savings at Interactive Investor, said: “These kinds of eye-watering sums are simply unaffordable for pensioners, many of whom have a small private pension pot and little option to make more pension contributions.”
More than half of pension savers believe they will never save enough to retire
More than half of people saving into pensions believe they will never put away enough to stop working when they get older, new research reveals. The report shows that 39% of homeowners are worried they are not saving enough for a comfortable retirement, with it found that 34% will not even meet their basic living costs. The poll also reveals that 8% of pension savers who own their homes stopped or cut pension contributions in the six months to February 2023. The Living Wage Foundation says the survey shows that even people who own their own home struggle to save and plan for the future. “Homeowners on low pay will be feeling the pressure the most, and the cost of living crisis is making it worse,” says Katherine Chapman, director of the Living Wage Foundation. The Living Pension campaign is pushing for an increase in the overall savings target from 8% to 12% overall.
Latest Insolvencies
Appointment of Liquidators – TRICORD LIMITED
Appointment of Liquidators – MCPEAKE COMPANY LIMITED
Appointment of Liquidators – BLACK HALL ASSOCIATES LIMITED
Petitions to wind up (Companies) – DH EUROPE LTD
Petitions to wind up (Companies) – THORNYHILL RESTAURANT LIMITED
Petitions to wind up (Companies) – DBS CIVILS LTD
Appointment of Liquidators – FORSYTHE CONTRACTS LIMITED
Petitions to wind up (Companies) – CHUBBY BAGS (UK) LIMITED
Petitions to wind up (Companies) – MN UFINA CAPITAL LIMITED
Appointment of Liquidators – ELLERAY PROPERTY LIMITED
Appointment of Liquidators – CEDARLOCH LIMITED
Appointment of Liquidators – DRAGONS TEACHING LIMITED
Petitions to wind up (Companies) – S.G HOLDING ENTERPRISE UK LTD
Appointment of Liquidators – C & J PAINTS LIMITED
Petitions to wind up (Companies) – WRITEME LTD
Petitions to wind up (Companies) – FOOD&DRINK LTD
Petitions to wind up (Companies) – WARDWATCH LIMITED
Petitions to wind up (Companies) – SEA SPARKS LTD
Petitions to wind up (Companies) – VANGUARD NUMBER 1 LIMITED
Petitions to wind up (Companies) – FIELDHEAD BUILDING SUPPLIES LIMITED
Appointment of Liquidators – CLARITY NETWORK SOLUTIONS LTD
Appointment of Liquidators – KIRKWOOD ENGINEERING (SCOTLAND) LIMITED
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 offer our members a fixed annual subscription regardless of how high the debt value maybe!
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.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Do you have a commercial late payer that is causing you grief? Use CPA’s no-win, no-fee, commercial debt recovery service!
If you have a particular business customer who is late paying and causing you sleepless nights, why not offer it to CPA for purchase on recourse?
CPA’s collection department will then pursue the debt. We will be liable for any costs incurred and then when we have recovered the debt, we will pay you the net principle debt recovered less our percentage.
Once you have enjoyed that success then you can consider the more cost effective membership which includes our Overdue Account Recovery service and Status/Credit reports as well as a range of other complimentary services.
Just call 020 8846 0000 and ask for Godfrey Nelson or Cris Shirley (business hours) or email debtpurchase@cpa.co.uk today.
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!