Business Information
UK SMEs miss out on over £250 billion of liquid cash flow because of slow and late payments. A new report from Siemens Financial Services has found that when unpaid invoices to UK companies are taken collectively, and added to the cost of the time and resources spent chasing their progress, the total value of the late payment problem for UK SMEs exceeds £250 billion. According to the research, SMEs also tend to suffer from slow or late payments disproportionately compared to other businesses; businesses with a turnover of under £1 million wait for 72 days for payment on average compared to 48 days for the UK's largest companies. Overall, unpaid invoices account for 14% of SMEs’ annual turnover and, according to the Association of Business Recovery Professionals, late payment is a major factor in one in five corporate insolvencies. To read Siemens Financial Services' report go to https://www.siemens.com/content/dam/webassetpool/mam/tag-siemens-com/smdb/financing/brochures/united-kingdom/sfs-uk-late-payment-report.pdf.
27% of exporting UK small firms will be deterred from trading should any tariff be introduced. The Federation of Small Businesses' (FSB) latest report, ‘Keep Trade Easy: what small firms want from Brexit’, indicates that the top priority market for 63% of UK small firms is still the EU single market, followed by the US (49%), Australia (29%), China (28%) and Canada (23%). The research also reveals the potential impact of tariffs being introduced to UK-EU trade, with 27% of exporting small firms genuinely deterred from trading with the EU should any tariff – no matter how low – be introduced. Crucially, small business exporters and importers also find non-tariff barriers (such as administrative burdens in dealing with customs) to be as equally important as tariffs. To read the FSB's news release go to http://www.fsb.org.uk/media-centre/press-releases/small-firms-reveal-trade-deal-wish-list-post-brexit.
A third of EU trade is with the US and China. New research from Eurostat has found that in 2016, the US (€610 billion, or 17.7% of total EU trade in goods) and China (€515 billion, or 14.9%)
continued to be the two main goods trading partners of the EU, well ahead of Switzerland
(€264 billion, or 7.6%), Russia (€191 billion, or 5.5%), Turkey (€145 billion, or 4.2%) and Japan (€125 billion, or 3.6%).
Trends observed over the past years are however very different for these top trading partners of the EU. After
recording a significant and almost continuous fall until 2011, the share of the US in EU total trade in
goods has begun to increase again. The share of China has almost tripled since 2000, while the share of Russia of Japan has nearly halved since 2013. As for Switzerland and Turkey, their
respective share of EU trade in goods has remained relatively unchanged over the entire time period. To read Eurostat's news release go to http://ec.europa.eu/eurostat/documents/2995521/7958465/6-29032017-AP-EN.pdf/6ab52f0c-de18-42c3-aa65-28e1a1675213.
The text above is a modification of a Eurostat news release. Eurostat does not accept any responsibility for this material.
Worldwide business expectations for economic expansion hit a 10 year high. According to a new survey from American Express and Thought Leadership Studio, global expectations for substantial economic expansion have hit a 10 year high (38%), and 70% of executives worldwide anticipate either modest or substantial growth this year - up from 64% last year. Overall, North America now has the most optimistic outlook on economic prospects worldwide, with 67% of respondents anticipating substantial economic expansion - the highest level for any region since this study began in 2008. In contrast, European expectations for economic expansion have declined year over year, with just 33% of respondents expressing optimism - down from 62% in 2016. The UK while most positive in the region, experienced the greatest drop in optimism, with 33% (down from 75% in 2016) expecting economic expansion. To read American Express' news release go to http://about.americanexpress.com/news/pr/2017/Global-Business-Outlook-Amex-Survey.aspx.
Mid-sized Australian businesses owe AU$8 billion in outstanding payments to suppliers. Dynamic Business has published an article which warns that late payment research from Amex, Xero and American Express highlights the cashflow burden suffered by Australian SMEs. American Express' research show that mid-sized Australian businesses owe AU$8 billion in outstanding payments to suppliers, with more than AU$2 billion currently overdue. In related news, cloud accounting provider Xero's recent survey of 500 Australian SMEs has found that 86% want the federal government to do more to address late payments by big business, and 79% support a government-backed policy to reduce the time it takes big businesses to pay small businesses Six in ten companes said they wouldn’t survive more than three months if all invoices went unpaid while 6% said they wouldn’t last a week. To read Dynamic Business' article go to http://www.dynamicbusiness.com.au/small-business-resources/finance-cash-flow/late-payment-research-from-amex-and-xero-highlights-the-cashflow-burden-for-smes.html.
Advice on payment practice reporting for UK businesses. The Construction Index has published an article, 'Advice on payment practice reporting', which clarifies the impact that the Reporting on Payment Practices and Performance Regulations 2017 will have on the Construction sector; a sector which Euler Hermes named as registering more payment delays than any other UK sector. Affected contractors (those with an annual turnover exceeding £36 million, a balance sheet exceeding £18 million or with more than 250 employees) have one financial year from the regulations’ start date to report information on the payment terms for all relevant contracts. The Federation of Small Businesses (FSB) has calculated that 50,000 'business deaths' could be avoided if payments were made on time – adding £2.5 billion to the UK economy. To read The Construction Index' article go to http://www.theconstructionindex.co.uk/news/view/advice-on-payment-practice-reporting.
British mid-sized companies boost overseas turnover despite the shadow of Brexit. According to new research from BDO, British mid-sized businesses' international turnover has grown by 50% - from £84 billion to £127 billion - since 2011. This growth significantly outstrips that of UK FTSE 350 and small businesses, which in fact has fallen by 14% (£425 billion to £366 billion) and 25% (£13.9 billion to £10.4 billion) respectively. BDO advises that the research shows that even with the shadow of Brexit negotiations looming, mid-sized firms remained confident and continued to grow overseas turnover; increasing overseas trade by 7% (from £119 billion to £127 billion). In comparison, the levels of overseas trade of FTSE 350 and small businesses in 2016 fell 30% (from £524 billion to £366 billion) and 13% (from £12 billion to £10.4 billion) respectively. Overall, the UK's 30,000 mid-sized companies (1.5% of all UK companies) contribute one-third (£1.2 trillion) of all UK turnover. To read BDO's news release go to https://www.bdo.co.uk/en-gb/news/2017/british-mid-sized-companies-boost-overseas-turnover.
UK growth upgraded for 2017 but to remain flat in the medium-term. The British Chambers of Commerce (BCC) has upgraded its UK GDP growth forecast for 2017 from 1.1% to 1.4%. However, it has downgraded its expectations slightly for 2018 (from 1.4% to 1.3%) and predicts 1.5% growth in 2019. The BCC has upgraded its growth forecast for 2017, driven by an upward revision to UK GDP growth data in the final quarter of 2016, and stronger than expected levels of consumer spending. There has also been a slight improvement in the outlook for investment and trade, compared to the previous forecast. However, economic growth is expected to remain well below its long-term average over the forecast period. To read the BCC's news release go to http://www.britishchambers.org.uk/press-office/press-releases/bcc-economic-forecast-uk-growth-upgraded-for-2017-but-to-remain-flat-in-the-medium-term.html.
UK Retail sales expanded at steady pace in year to March. UK Retail sales volumes grew at a steady pace in the year to March, and slightly faster than expected, according to the CBI’s latest monthly Distributive Trades Survey. The survey of 116 firms, consisting of 65 retailers, showed that growth in the volumes of sales was similar to that seen in February, but is set to accelerate in the year to April. 44% of retailers said that sales volumes were up on a year ago, whilst 35% said they were down, giving a balance of +9%. In addition, 24% of retailers said the volume of sales were good for the time of year, with 31% saying they were poor, giving a balance of -6% - the lowest survey balance since July 2016. To read the CBI's news release go to http://www.cbi.org.uk/news/retail-sales-expanded-at-steady-pace-in-year-to-march/.
UK business rates to rise in 2017: The ripple effect. According to a new research by Sage, impending rises to business rates (following the first revaluation of business premises in seven years) are expected to have serious consequences for many firms in London and the southeast. Although businesses in areas where the property market is less buoyant will not be so badly affected, areas of London that were once ‘up-and-coming’ and attractive to small businesses are now associated with some of the steepest rises in business rates. Sage warn that should individual companies go out of business, the danger of a ‘ripple effect’ is particularly prominent in these areas, and the aftermath of this increase could extend far wider to affect a number of other businesses and communities. To read Sage's blog go to http://blog.sage.co.uk/index.php/2017/03/business-rates-rises/#.WNP7rfmLSUk.
IEA warns that Irish exports to mainland Europe will be seriously implicated by a ‘hard Brexit’. The Irish Exporters Association (IEA) has released results of a recent survey, 'Quarterly Export Eye Q1, 2017', conducted with its members regarding Irish exporters’ sentiments and has found that 94% of its members currently do business with or export to the UK. However, following the Brexit referendum, 58% of IEA members are planning to diversify export markets, with the US (25%), Germany (22%), France (21%), Belgium (16%), China (16%) and Poland (16%) being the most popular targets. Overall, when members were asked to rank major threats to the Irish economy in 2017, 81% of IEA members said Brexit. This was followed by: Donald Trump's US presidency (63%), Ireland's cost competitiveness (59%), lack of affordable housing(47%), elections in Holland, France and Germany (46%) and lack of availability of skilled talent in Ireland (32%). To read the IEA's report go to http://www.irishexporters.ie/wp-content/uploads/2017/03/IEA_QEE_March17_Report.pdf.
UK High Street sees worst February in eight years. According to BDO’s latest High Street Sales Tracker, UK retailers have just experienced their worst February since 2009, with like-for-like sales dropping -2.2%. The decline, coming off an already negative base of -1.7% for February 2016, marks the third month in a row of negative growth and the fourth consecutive February with no growth. Sophie Michael, Head of Retail and Wholesale at BDO LLP, commented: “February saw a perfect storm – both figuratively and literally. Doris kept shoppers away from the high street, but the relatively poor growth of online sales in February shows that the economic headwinds significantly curbed spending." To read BDO's news release go to https://www.bdo.co.uk/en-gb/news/2017/high-street-sees-worst-february-in-eight-years.
Late payments: A cultural issue for UK SMEs? An article in Real Business suggests that the UK has developed a culture of late payments. The Federation of Small Businesses (FSB) has found that SMEs account for 99% of all private sector businesses in the UK, many of which struggle with basic cash flow issues as a result of late payments. In addition, a recent study by BACS found that SMEs in the UK are owed a staggering £26.3 billion in overdue payments. As a result, the UK government is taking active steps to address the issue of late payment, such as the implementation of a new statutory reporting duty for payment practices and performance, and the appointment of a small business commissioner. To read Real Business' article go to http://realbusiness.co.uk/accounts-and-tax/2017/03/14/late-payments-a-cultural-issue-for-smes/.
Coventry and Warwickshire’s fastest growing companies boost the local economy by £11 billion. According to the Coventry and Warwickshire Growth Barometer published by BDO, Coventry and Warwickshire’s fastest growing companies have boosted the local economy, increasing revenues by 17% to £11 billion. Businesses from nine different sectors appeared on the list, with manufacturing and engineering companies making up 14 of the top 50. However it was real estate and construction that experienced the fastest growth, with a 50% average increase in turnover in the last year. The hospitality and leisure sector was close behind (44%), while technology and media companies reported a 23% increase in revenues. To read BDO's news release go to https://www.bdo.co.uk/en-gb/news/2017/fast-growth-local-companies.
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