What late payments tell us about lock-down – Covid-19 business news  5 June 2020.

5 June 2020.

James Salmon, Operations Director.

The Covid-19 lock-down continues and we are having to make do in a new normal.

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.

Late payments tracker shows the UK is beginning to feel the effects of lock-down.

38% of invoices by value are at least ten days overdue, as the UK is beginning to feel the effects of lock-down exit.

However, by volume, the percentage is 49%! This is a increase since the pandemic of 209%

The sectors hardest hit by late payments in the UK since 25 May are Real estate, hospitality and ICT.

The Sidetrade tracker analyses of late payments shows the impact of the Covid-19 crisis on twelve business sectors. As of 25 May, the UK sectors hardest hit by late payments during covid-19 are:

  • Finance, Insurance, Real Estate – Late payments show 76% of invoices over 10 days overdue
  • ICT (Information, Communication, Technology) – Late payments show 60% of invoices over 10 days overdue
  • Leisure, Hospitality –  late payments show 55% of invoices are over 10 days overdue

Prior to the covid-19 pandemic, late payments were already an issue in  Finance, Insurance, Real Estate (56%), and in  ICT( 53%).

Sectors least impacted by the crisis include Food industry (19% invoices over 10 days overdue), retail (22%) and manufacturing (23%).

Late payments have been fluctuating in May between 35% and 39% by value  but this an improvement from the peak at the end of April of 43%

However, It is still far worse than before the pandemic lock-down when late payments in the UK were fluctuating between 25% and 29% by value. So late payments by value have increased by approximately 40% since the lock-down started.

Looking at volume however, there has been marginal improvement since the start of May when 53% of invoices were paid late, with 49% now being paid late.

However this is still a 209% increase over the figures by volume pre-pandemic when the volume of late payments was below 16%

The UK has the highest rate (38%) in late payments by volume of the six countries surveyed, whereas the Netherlands can boast the lowest figure with 18% in late payments, not far from their pre-pandemic rate of 15%.

Late payments paints a picture of an economy in deep distress but it would appear the situation is stabilizing after the initial sharp shock and very slowly starting to improve, albeit, incrementally.

The economy is clearly being supported by the unprecedented intervention by the Government and the Bank of England.

What happens when this support starts to be removed is yet to be seen.

https://invoice-tracker.sidetrade.com/

Covid-19 general news

 
While the pandemic is slowing in some countries that were first hit, the number of new worldwide cases is growing faster than ever, with more than 100,000 reported each day.

New hot spots are emerging in Latin America, Africa, Asia and the Middle East. Although about a quarter of the 380,000 deaths worldwide so far have been in the United States, the geography of the pandemic is moving. Egypt now has 28,000 cases, Bangladesh 55,000, where a cyclone hs compounded the issue.
 

Face coverings are to be compulsory on public transport in England from 15th June Transport Secretary

How to make your own face mask

Business Secretary Alok Sharma is self-isolating at home after becoming unwell in Parliament. Mr Sharma looked uncomfortable while taking part in a debate on Wednesday, mopping his brow several times with his handkerchief while speaking. He has been tested for corvid-19 and returned home but it is calling in to question the return of parliament to physically seating’s in parliament over virtual meetings.

Research from the University of Oxford said the best way to reduce the spread of the coronavirus post-lockdown is for people to limit their interactions to a few repeated contacts, in so-called social bubbles.

Anglian has revealed demand for water across the East of England was 20% above normal levels during May. The heat and increased hand washing no doubt contributed. Hand-washing to prevent Covid-19’s spread may have further boosted demand during a dry, sunny month, it said.

With rain forecast in the coming days, Boris Johnson has urged members of the public not to gather inside.

The Prince of Wales says he was “lucky” to experience only mild symptoms after contracting coronavirus in March. But Prince Charles told Sky News: “I’ve had it, and I can so understand what other people have gone through.”

Looking for a good read? – We recommend the following BBC article ‘The mystery of the ‘silent spreaders

Coronavirus cases in the U.S. increased 1.1% as compared to the same time yesterday to 1.86 million

Iran logged more than 3,000 new covid-19 cases for the third consecutive day, sparking fears of a second wave of infections.

AstraZeneca has said it will be able to supply 2 billion doses of its potential virus vaccine following two new deals. Last month, AstraZeneca said it could manufacture one billion doses, that it is developing with scientists at Oxford University. On Thursday, it signed two deals, including one backed by Bill Gates, allowing it to double production. The British drug maker has agreed to supply half of the doses to low and middle-income countries.

Plans are under way to clear the backlog of court cases that have built up during the coronavirus pandemic. Solicitor General Michael Ellis said he was “concerned” but added “everything has been disrupted by this awful” virus.

Markets.

The ECB released news of a further boost to the Eurozone economies – increasing bond buying from 600 billion euros to 1.35 trillion. The programme will now run until June 2021, six months longer than planned and will keep borrowing costs low for nations and businesses as they face huge budget deficits and recession. However markets were down with the german index down 0.56% and in France, it dropped 0.34% in a classic case of buy the rumour, sell the news.

In the US a further 1.9 million filed for unemployment bringing the total during the pandemic to 42 million. US stocks sold off with the S&P falling 0.34% and the NASDAQ down 0.69%.

In the UK the negative sentiment took the FTSE 100 down .64% to 6341 and the 250 dropped 0.4% with the hardening of lines on Brexit proving negative for the market.

At the time of writing the pound is at 1.265 USD and 1.115 Euros.

Government announces £10bn trade credit insurance scheme

The government has said it will guarantee up to £10bn of trade credit insurance transactions as it seeks to relieve some pressure on British manufacturers and construction firms amid the coronavirus pandemic.

Economists advise UK follows Germany’s tax cuts

The UK should follow Germany’s example and introduce cuts to VAT and launch a spending programme to stimulate Britain’s economy in the aftermath of the coronavirus crisis, experts have said.

Angela Merkel has announced a €130bn stimulus plan which includes temporary cuts to VAT, from 19% to 16%, along with €50bn for rail and broadband networks and electric car subsidies.

Gerard Lyons, Boris Johnson’s former economic adviser, proposed cuts in VAT and stamp duty in a paper published by the Policy Exchange think tank.

RSM’s George Bull tells the Telegraph that Chancellor Rishi Sunak would have to make a significant cut to VAT to boost demand – such as bringing it down to 15% for a limited time.

Thousands of jobs lost in car industry

Car dealership Lookers has announced it will cut up to 1,500 jobs with the closure of more showrooms in the UK.

The company reopened its showrooms on Monday after the government lifted coronavirus lockdown restrictions.

Meanwhile, Aston Martin plans to make 500 workers redundant as it looks to cut costs under new chief executive, Tobias Moers, because of the slump in sales due to the coronavirus pandemic.

Additionally, Volkswagen-owned Bentley is to cut 1,000 jobs in the UK, about a quarter of its workforce. A formal announcement is expected today.

The cuts come as the Society of Motor Manufacturers and Traders (SMMT) suggest that new car sales fell 89% in May.

Several sources note that Lookers is under investigation by the Financial Conduct Authority over sales protocols while accountants from Grant Thornton probe suspected internal fraud within at least one operating entity.

Starting salaries and job placements continue to fall

Figures from the Recruitment and Employment Confederation and KPMG show both permanent and temporary job placements fell again last month while the number of people looking for work rose at its fastest pace in more than a decade.

Permanent starting salaries fell at their quickest rate since February 2009 while pay for temporary workers declined at the fastest rate for 11 years.

Nursing and medical care was the only sector to report more vacancies while the worst hit sector was retail, followed closely by the hotel and catering industries.

Retail

UK Retailers saw record online sales last month as trading more than doubled but it still failed to offset the impact of empty high street stores, according to new figures.

The BDO retail sales tracker for May revealed that online sales more than doubled compared with the same month last year – the highest jump on record – as shoppers moved online.

Figures from BDO show like-for-like online sales jumped by 129.5% in May as the pace of shoppers shifting online continued to accelerate during lockdown.

However, overall sales were down 18.3% – the second worst result after April’s historic low.

Sophie Michael, head of retail and wholesale at BDO, said: “Despite the significant pick-up in ecommerce, the monumental collapse in discretionary spend remains stark as retailers continue to face challenging headwinds. Retailers will be looking to both central government and local authorities for creative solutions to ensure the high street has a viable future as lockdown restrictions continue to lift.”

Central bank’s money printing heading for £1trn

Capital Economics is predicting a further £350bn in QE from the Bank of England over the next twelve months, on top of the £200bn announced in March.

This would bring the total value of bonds purchased to £995bn. The consultancy’s chief economist Paul Dales says it will be at least ten years before the Bank even thinks about unwinding QE and five years before the base rate rises above 0.1%.

Lockdown bill rises to £132.5bn

The Office for Budget Responsibility has said the government’s emergency measures to shore up the economy are likely to cost £132.5bn, up about 7.5% from a previous estimate.

However, the OBR has cut its estimate of the cost of the furlough programme by 30% after it found employers have been concentrating its use on part-time and low-paid workers.

The fiscal watchdog now says the gross cost will reach £60bn, down from a previous estimate of £84bn.

UK government paid £1.7bn to private groups for coronavirus contracts

At least £1.7 billion worth of government contracts have been handed out to private companies in the past three months. Analysis shows around £34m has been awarded to consultants though 30 contracts, mostly benefiting the Big Four.

PwC was the single largest beneficiary having been contracted for nearly £10m of financial advice to the Cabinet Office and the British Business Bank. Deloitte has also been contracted to provide support and expertise in relation to procurement and will help to run the national Covid testing programme.

Sellers granted stamp duty coronavirus extension

HMRC has extended the deadline for second home owners to apply for a refund on the extra 3% stamp duty they paid.

The refund is available to those who sell their old property within three years and make their new home their primary residence.

But the coronavirus lockdown brought the market to a standstill meaning many house sales were delayed.

Now, the government has said anyone whose three-year deadline was from January 2020 on-wards will be granted an extension if they write to HMRC.

Arch Company extends rents relief for SMEs

The owner of an empire of railway arches in London, home to restaurants, gyms and hair salons, will extend a rents relief package to help tenants impacted by the coronavirus crisis.

The Arch Company said that for the upcoming quarter, small firms banned from opening by government guidance will continue to receive a rent-free period until they are allowed to open.

Those that are able to open, but severely affected, will get a rent holiday for July. For August and September they will have the option of drawing down deposit funds to cover half the rent.

German Manufacturing

German Factory Orders plunged in April at a much faster rate than expected as coronavirus hit the global economy and caused demand to dry up. Factory orders dropped 25.8 per cent in April compared to a month earlier, when they fell by 15 per cent. The figure was far below the 19.7 per cent contraction analysts had been expecting.

Are Ireland’s days as a tax haven numbered?

The Independent’s Ben Chapman suggests with Ireland reporting bumper tax income from global corporates the country and others with generous tax incentives is likely to come under the spotlight again.

Despite taxes on consumption falling as people stayed home during lock-down, Ireland took in an extra £1.1bn from taxes on company profits compared to a year earlier.

Alex Cobham, chief executive of the Tax Justice Network, comments: “Ireland is still making out very nicely from procuring profit shifting at the expense of many other EU member states, even as the pandemic imposes grave health, social and economic costs on everyone.”

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

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.

The “Why” of the late payment culture.

New PM should walk the walk and back small firms over late payments

Paying late is “crack cocaine” to big business.

Late payment culture risks “spiraling out of control”

visit our late payment compensation page

See our full blog and FAQ on late payment compensation

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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