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Business Information
Almost £50 billion of debts written off by UK SMEs. The Actuary has published an article which reports that according to research by Amicus Commercial Finance, the average amount of debt written off by UK SMEs last year was £11,708. 76% of SMEs wrote off debt during this time, totalling just under £50 billion collectively - or £134 million every day. Amicus Commercial Finance Managing Director, John Wilde, said: “Our research shows that not only is there a reliance by many UK SMEs on clients’ invoices being paid within the debtor day period, but that despite this, significant amounts of debt are being written off due to non-payment. To read the article on The Actuary's website go to http://www.theactuary.com/news/2016/12/almost-50bn-of-debts-written-off-by-uk-smes/.
Research shows that disputes are costing UK businesses £billions. New research from the Federation of Small Businesses (FSB) shows that disputes are costing small firms in England and Wales at least £11.6 billion each year. Nearly three quarters (72%) of small business legal struggles can be attributed to late or non-payment and most small businesses (70%) have faced at least one dispute in recent years. The research also showed that the amount under dispute is £18,000 on average, but it can cost a small firm a further £17,000 when having to spend time and money dealing with the problem. As a result, the consequences of disputes can be devastating for small businesses, ranging from short-term cash-flow difficulties right through to insolvency. To read the FSB's news release go to http://www.fsb.org.uk/media-centre/press-releases/billions-tied-up-in-small-business-disputes.
£26 billion owed in late payment, but UK SMEs believe that this won't get worse under Brexit.
Almost half of the UK’s SMEs are being paid late, according to Bacs Payment Schemes Limited (Bacs). The average late payment debt now stands at £32,185 which equates to a substantial £26.3 billion total across the 47% of SMEs that say customers and clients stray beyond agreed payment terms. But when asked about the UK’s decision to leave the European Union and its impact on being paid on time, an overwhelming majority (83%) felt that ‘Brexit’ would have no impact on late payments. In the meantime, the effect of companies not being paid on time remains significant with 32% of SMEs impacted by late payments admitting they are forced to pay their own suppliers late. To read Bacs' news release go to https://www.bacs.co.uk/NewsCentre/PressReleases/Pages/-%C2%A326_billion_owed_in_late_payments_but_this_won%E2%80%99t_get_worse_under_Brexit_say_smaller_UK_businesses.aspx.
BCC Economic Forecast for the UK predicts that 2016's momentum is not set to continue. The British Chambers of Commerce (BCC) has announced that it has upgraded its UK growth forecast from 1.8% to 2.1% for 2016, and from 1.0% to 1.1% in 2017 (the weakest annual rate of growth since the financial crisis) after the UK economy recorded stronger than expected growth in the third quarter. However, Suren Thiru, Head of Economics at the BCC, commented: “We have upgraded our growth forecasts for 2016 and 2017, but the near-term outlook for the UK economy remains challenging, with the recent resilience in growth expected to weaken. That said, we do not expect the economy to enter into a recession over the next few years." To read the BCC's news release go to http://www.britishchambers.org.uk/press-office/press-releases/bcc-economic-forecast-2016-momentum-not-set-to-continue.html.
Over five thousand restaurant companies risk insolvency as Brexit raises costs. According to research by Moore Stephens, a total of 5,570 restaurant companies have at least a 30% chance of going insolvent within the next three years as Brexit raises costs and disposable incomes stagnate. In addition, the sharp decline in the value of the Sterling since the Brexit vote has added to the pressure on the sector by increasing the cost of imports for restaurants. The UK imports 48% of its food and many restaurants rely heavily on imported food and wine. Even some of the largest restaurant companies (such as The Restaurant Group) have struggled with weak trading. To read Moore Stephens' news release go to http://www.moorestephens.co.uk/news-views/december-2016/over-five-thousand-restaurant-companies-risk-insol.
Ireland named as the best place to do business in Europe. According to a study by World First, Ireland has come top in the inaugural 'Best Place to do Business in Europe Index'. A combination of a business friendly tax system, easy access to finance and strong economic growth placed Ireland ahead of Slovakia, Latvia and Malta. Italy, whose economy has suffered over the past few years, came last in the ranking for businesses looking to expand in Europe. Despite the uncertainty caused by the EU referendum, the UK comes 5th on the list of the best place to do business in Europe, beating Spain (10th) France (14th) and Germany (25th). To read World First's news release go to https://www.worldfirst.com/uk/blog/international-business/best-place-to-do-business/.
139,000 UK businesses are only paying the interest on their debt. According to new research by R3,139,000 businesses in the UK are only paying the interest on their debt and not repaying the debt itself, and the number of businesses in this position – equivalent to 8% of all UK businesses – has returned to levels more in line with previous years. However, although only paying off the interest on debt is often a sign of a ‘zombie business', R3 suggests that it’s more likely that otherwise healthy businesses are taking advantage of record low interest rates to keep cash in their business. This is born out by R3/BDRC research which shows that 33,000 businesses are struggling to pay debts when they fall due - a decrease from the same time last year when 55,000 were in that position, and a significant decrease on May 2013 finding when 134,000 businesses were struggling to pay their debts. To read R3's news release go to https://www.r3.org.uk/index.cfm?page=1114&element=27981&refpage=1008.
Online UK retail sales grew by 10.9% compared to last year. BRC/KPMG latest retail sales monitor for November 2016 has reported that UK retail sales increased by 0.6% on a like-for-like basis from November 2015, when they had decreased 0.4% from the preceding year. On a total basis, sales rose 1.3%, against a 0.7% increase in November 2015. This is slightly below the 3-month average of 1.6% but slightly faster than the 12-month average of 1.1%. Over the three-months to November, online sales grew 10.7%. Paul Martin, UK Head of Retail at KPMG, commented: "There was an increased preference for shopping online this November, undoubtedly the result of the Black Friday shopping bonanza that has grown in popularity in the UK. Online sales grew by 10.9% on last year and penetration rates for the month rose to a staggering 27.6% . . . All categories performed well, however toys and baby equipment were at the top of the list for shoppers." To read KPMG's news release go to https://home.kpmg.com/uk/en/home/media/press-releases/2016/12/brc-kpmg-retail-sales-monitor-november-2016.html.
Construction News Barometer results show the majority of UK contractors continue to see suppliers going bust. Nearly 82% of contractors have had a supplier go bust on at least one project over the past year, the latest Construction News Barometer has shown. This was an increase on Q2, when 71% of firms had seen it happen on more than one scheme, with just over 5% reporting it on a single project – a total of just over 76%. The latest Barometer results tie in with a number of high-profile administrations that have rocked the industry during 2016 – the most notable of which was Hewden last month. To read Construction News' article go to https://www.constructionnews.co.uk/data/majority-of-contractors-see-suppliers-go-bust/10015545.article (Subscription may be required).
The battle of David versus Goliath in the UK construction industry. According to new research from Bibby Financial Services (BFS), over half (55%) of UK subcontractors believe they must accept the terms of contracts with large construction firms, or face the risk of losing future business. Findings of the research also reveal that late payment from prime contractors is the most significant challenge subcontractors face over the year ahead (27%), followed by skills shortages (21%). Helen Wheeler, Managing Director of Construction Finance at Bibby Financial Services said: “One thing that is clear is the impact poor payment practices are having on the industry. It is unsurprising but discouraging that late payment from main contractors is still an issue for smaller construction firms across the country.” To read BFS' news release go to https://www.bibbyfinancialservices.com/press/news/2016/subcontractors-forced-to-accept-contracts.
UK Manufacturing gains momentum as recovery begins. According to a survey released by EEF and BDO, Britain’s manufacturers saw the delayed recovery finally arrive in the final quarter of 2016 with a much improved boost to output and orders. Publishing the Q4 Manufacturing Outlook survey and revised economic forecasts, EEF pointed to early signs that the sector has left behind the negative effects of the low oil price and concerns about global growth and is now seeing opportunities from a resilient UK market and brightening export prospects. However, EEF stressed that the picture is one of the sector regaining ground after a sluggish eighteen months. While key indicators moving back into the black is a positive development, risks remain on the horizon, some Brexit related and others potentially stemming from elsewhere in the world. As a result, despite the improvement in conditions, EEF is still forecasting that manufacturing will contract in 2017. To read BDO's news release go to https://www.bdo.co.uk/en-gb/news/2016/manufacturing-gains-momentum-as-recovery-begins.
Steady UK private sector growth expected to continue. According to the CBI’s latest Growth Indicator, private sector growth remained steady in the three months to November. The survey of 715 respondents across the manufacturing, distribution and service sectors showed the pace of growth rose to a balance of +9%, compared with +8% in the three months to October. Performance across the sectors was mixed, however, with retailers and consumer facing companies reporting a rise in growth, whilst manufacturers saw a slower pace of growth. Growth in business and professional services, meanwhile, was broadly flat for a second month. Looking ahead, businesses across most sectors expect to see a slightly higher rate of growth continue across most sectors over the next quarter (+11%). To read the CBI's news release go to http://www.cbi.org.uk/news/steady-growth-expected-to-continue/.
The UK economy has stabilised - albeit in a lower gear. The latest BDO’s Output Index, which indicates how businesses expect to perform in the coming three months ahead, has risen from 96.7 to 97.1 in November, suggesting that, for now, the UK economy has stabilised - albeit in a lower gear than it had been running at pre-referendum. However, BDO suggests that rising inflation and falling business optimism means a bumpy road ahead in 2017.
Commenting on the findings, Peter Hemington, Partner, BDO LLP, said:
“Businesses remain nervous during this period of Brexit limbo and this nervousness is a significant contributor to the slower rate of growth we are seeing." To read BDO's news release go to
https://www.bdo.co.uk/en-gb/news/2016/business-output-rises-for-first-time-in-17-months.
GDP up by 0.3% in the euro area and by 0.4% in the EU28. According to an estimate published by Eurostat, Seasonally adjusted GDP rose by 0.3% in the euro area (EA19) and by 0.4% in the EU28 during the third quarter of 2016, compared with the previous quarter. Compared with the same quarter of the previous year, seasonally adjusted GDP rose by 1.7% in the euro area and by 1.9% in the EU28 in the third quarter of 2016, after also +1.7% and +1.9% respectively in the previous quarter. During the third quarter of 2016, GDP in the United States increased by 0.8% compared with the previous quarter (after +0.4% in the second quarter of 2016). Compared with the same quarter of the previous year, GDP grew by 1.6% (after +1.3% in the previous quarter). Among Member States for which data are available for the third quarter of 2016, Croatia (+1.7%), Slovenia (+1.0%), Greece and Portugal (both +0.8%) recorded the highest growth compared with the previous quarter, while Lithuania recorded the lowest growth (+0.1%). To read Eurostat's news release go to http://ec.europa.eu/eurostat/documents/2995521/7756312/2-06122016-AP-EN.pdf/2c2866b3-e369-4160-bca4-1238757bd740.
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