More than half of British businesses are being left with no alternative but to suspend work and services in order to protect their cash flows against the continued threat of late payment, research shows.

This hard-line tactic, used by 54 per cent of businesses during 2012 according to Hilton-Baird Collection Services’ Late Payment Survey, is representative of the no-nonsense approach that many are adopting against late paying customers.

This figure is seven per cent higher on an annual basis and one of several credit management strategies that rose in popularity over the same period, including:

• New customer credit checks (used by 48 per cent)
• Writing to debtors, including solicitor involvement (47 per cent)
• Suspending customer credit facilities (45 per cent)
• Small Claims Courts and County Court Judgments (31 per cent)

The commercial debt collection agency’s annual survey also found that six per cent of the businesses surveyed had to make at least one employee redundant last year as a direct consequence of late payment.

One in 20 respondents were also forced to reduce staff working hours and shifts due to their customers’ failure to pay on time, as official statistics from the Office for National Statistics suggest the UK’s unemployment rate increased to 7.9 per cent in the three months to the end of February 2013.

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JD Sports Fashion’s pre-tax profit plunged 18.3% to £55.1 million in its last financial year as losses from its Blacks acquisition, which it acquired last January, hit the group.

The group’s core sports stores saw revenues grow by 10.2% to £854 million, with operating profits up 4.7% to £77.8 million.

But its outdoor stores, which include Blacks and Millets, made operating losses of £14.9 million, though JD said their performance had since improved thanks to a new management team, better stock management, an ongoing cost cutting programme and investment in stores.

The retailer said performance was improving in its outdoor fascias now that its new management team, led by former Cotswold Outdoor buying and merchandising director Ken Reeve, had been installed. It said its like-for-likes in the business had “benefited significantly” from both the cold weather and a sustained clearance programme from January to March.

The group closed 122 Blacks and Millets stores over the year, leaving it with 174 outdoor clothing stores in the UK. JD Sports wants to cut this to 140 in the long term.

“The core sports fascias in the UK continue to produce excellent results and provide the group with a very solid foundation for ongoing profitability and cash generation,” said Executive Chairman, Peter Cowgill.

“We are pleased overall with the start that we have made to the new year. A very considerable amount of reorganisation in both outdoor retail and our warehousing and distribution operations is now behind us and this should benefit trading in the balance of the year.”

Mr Cowgill insisted that the worst was over and that deals with key brands such as outdoor label Jack Wolfskin were driving customers back into its stores.

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British retail giant Tesco is expected to announce its first year-on-year decline in underlying profits in two decades, as a result of last year’s expensive turnaround plan.

Analysts expect that the group will announce an underlying pre-tax profit of £3.5 billion for the year to February 2013, down 10.7 per cent from £3.92 billion the previous year, at its preliminary results tomorrow.

Tesco makes over 60 per cent of its revenues from its domestic market, however, cutting prices and hiring more store staff has so far failed to offset the impact of the horsemeat scandal, together with tough competition from discount stores such as Aldi and ongoing difficulties with Tesco’s non-food ranges.

Other factors impacting Tesco’s earnings are the Eurozone debt crisis, regulatory issues in South Korea and its loss-making Fresh & Easy business in the US.

While Tesco tries to improve service and reassure shoppers after finding horsemeat in some of its products, it is also experiencing difficult trading conditions overseas.

More than five years ago, Tesco planted its flag firmly on US shores by launching the Fresh & Easy chain. This week, Britain’s largest supermarket owner is set to confirm that it is abandoning the venture, having sunk £1 billion into its doomed transatlantic foray.

Tesco fluffed the US, where its Fresh & Easy chain crashed and burned. Management got the marketing wrong, they got the packaging wrong, and they got the customer experience wrong.

Even before the US hit, profits are expected to have fallen by 10 per cent to £3.4 billion in the year to February. Revenues are thought to have risen 1.6 per cent to £66.2 billion.

Tesco has recently announced a buy-out of the family restaurant chain Giraffe and also holds stakes in Harris + Hoole coffee shops and Euphorium bakeries. Tesco’s boss, Philip Clarke, is expected to outline how these businesses will help add pizzazz to stores covering more than 6,300 sq metres (60,000 sq ft).

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

The gold industry has fallen to its lowest level in two years, while wider commodity prices have also declined following disappointing Chinese economic data.

Gold has lost some of its gleam among small investors who once saw it as a financial salvation.

The price is down 15% in two days to approximately $1,400 (£914) an ounce, which counts as a serious reappraisal since it follows an 18-month period in which the price meandered between $1,600 and $1,800.

The fall marks the sectors worst two-day performance since 1983, ending a decade-long boom and entering bear market territory. The surprise dramatic collapse led a dip in other commodities and shares.

Before the drop, gold had climbed every year since 2001, as investors bought the metal both as protection against inflation and as a so-called safe haven. The precious metal peaked as lawmakers wrangled over raising the debt ceiling in the summer of 2011 and threatened to push the US into default.
Slowing demand from the weakening Chinese economy has been blamed after gloomy figures surprised markets – economic growth came in at an annualised 7.7% at the end of last year, well below the 7.9% economists had forecast.

Furthermore, a slowdown in inflation, combined with speculation the Federal Reserve is considering winding down its stimulus program, prompted investors to sell.

This means that the rate of US inflation is likely to fall, meaning investors have less reason to hold gold to avoid a corresponding decline in the value of cash investments.

Another drag on prices has come from India, the world’s biggest buyer of gold bullion, which introduced a 50% import tax that has triggered a 24% fall in the amount of gold brought into the country in the first quarter of this year.

Gold mining company shares fell sharply as a result, with Fresnillo ending down 15%, and Randgold dropping 8.3%.

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

New research by credit information expert, Equifax, suggests consumers are taking a much more proactive approach to managing their credit data. Nearly a third (32%) of customers who have subscribed to Equifax credit monitoring services for at least 6 months said they first accessed a copy of their credit report because they wanted to check their credit report or credit score before applying for new credit. Contrary to the common belief that consumers only obtain a copy of their credit report if they are declined by a lender, this new research illustrates how much more informed people appear to be about the role credit information plays in lending decisions.

The Equifax research also revealed that more than half of customers who regularly monitor their credit report first requested a copy simply because they wanted to know what information was on it or see their credit score. Over half (51%) said they wanted to be kept up-to-date with any changes to their credit information.

For those checking their credit report before applying for new credit, personal loans and credit cards were the most popular finance products at 29% each. A quarter of consumers were planning to apply for a mortgage and 12% for a car loan. However, although credit information is checked when mobile phone agreements are set up, only 4% of consumers had obtained a copy of their credit report before this purchase.

“It is interesting to see that the number of consumers who obtained their credit report after being refused credit was less than a quarter (24%), compared to nearly a third (32%) who looked at their credit report before applying for new credit”, explained Neil Munroe, External Affairs Director for Equifax. “This seems to demonstrate a real change in consumer understanding of the role of credit information.

“We think it’s important for consumers to check their credit information before they make any applications for credit. This will ensure they are in the strongest position to secure the best deal available to them and will reduce the risk of them having to make multiple applications because they have been refused by the first lender they go to.

“By checking their credit report, consumers can understand exactly how a lender will view them – and make sure that important information such as electoral registration is up to date.”

“If someone has been declined credit, they should avoid applying elsewhere until they fully understand the reason why they were refused so they can work to rectify the situation” continued Neil Munroe. Having a copy of their credit report will also help in that process.”

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

Data released this morning by the Office for National Statistics showed annual Consumer Price Index (CPI) inflation held steady at 2.8% in March, the same as in February. The largest upward pressure on the headline figure came from the prices of recreation and culture activities. The main downward pressures came from the prices of furniture and furnishings, alcoholic beverages and tobacco and, importantly, transportation. The upward and downward pressures balanced to produce no overall change in the headline index. Following a period of relative volatility, the CPI index has been broadly flat for the past six months.

The prices of recreational and cultural activities rose by 0.5% between February and March 2013, compared to a 0.1% decline over the same period in 2012, putting upward pressure on the headline rate of inflation. The rising prices of digital cameras, books and DVDs bought over the internet contributed were the main factors behind price increases for recreation and culture.

By contrast, slowdowns in the rate of price growth for transport and of alcoholic beverages and tobacco served to stem any increase in the headline rate of inflation. Transport prices rose by 1.7% over the year to March 2013, lower than the 1.9% growth experienced over the year to February. Petrol prices increased by 2.2p per litre between February and March 2013, compared to a more substantial rise of 3.3p per litre one year earlier. The prices of alcoholic beverages and tobacco rose by 6.4% over the year to March, compared to 7.0% over the year to February.

Despite recent declines in the price of a barrel of Brent Crude, several factors are expected to keep inflation elevated at around the 3.0% mark until late in the year. The pound has depreciated against the dollar and other major currencies since the start of 2013, pushing up the price of energy imports in pound terms. On 1st January 2013, a pound could buy 1.62 USD; on 1st April it could purchase only 1.52 USD. This sterling depreciation has the potential to put upward pressure on the rate of domestic energy inflation and transport costs throughout this year. Counteracting these pressures, domestic and developed world economic weakness will act as a break on inflation over the near term. Overall, we expect the upward and downward price pressures to remain broadly balanced for much of 2013, keeping inflation stable but well above target.

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

The Institute of Credit Management (ICM) and the Minister of State for Business and Enterprise Michael Fallon have published their monthly ‘tip’ for small businesses to better manage their cashflow.

“Find out, before you raise an invoice, what details your customer needs (e.g. do you need a purchase order number?) to ensure it can be processed quickly. It will make your life, and theirs, easier and might save payment delays and time wasted chasing.”

The cashflow ‘tips’ are derived from the series of Managing Cashflow Guides published by the ICM for BIS, of which there have now been more than 400,000 downloads.

For further information, log on to http://www.creditmanagement.org.uk/bisguides.htm

David James Wild, the director of three connected holiday club companies in Morecombe and Carnforth, has been disqualified by the High Court from being a director for nine years for aggressively promoting holiday club memberships to the public that locked customers in to deals and provided only very limited access to resorts.

The disqualification follows an investigation by the Insolvency Service.

Mr Wild, 55, was the director of APD Leisure and Marketing Limited, APD Leisure Group Limited and APD Leisure and Marketing Group Europe Limited. All three companies used high pressure sales techniques to market holiday club memberships and claimed to provide access to unused weeks at timeshare resorts but, when customers tried to book holidays, they were told they were unable to do so.

Following the disqualification in January 2013, the court gave Mr Wild time to appeal which has now elapsed. The disqualification order therefore now stands. The order prevents Mr Wild from acting as a director of a limited company without the permission of the court, until January 2022.

All three companies had previously been wound-up in the public interest, following investigation by the Insolvency Service. The companies took in more than £500,000 overall from of customers, leading to complaints from 234 people who expressed dissatisfaction with the service provided.

In making the disqualification order the court found that under Mr Wild’s control the companies had:-

• Used high pressure sales techniques to induce customers to enter into agreements and pay for holiday club memberships,
• Not allowed customers to cancel arrangements,
• Arranged the sales agreement in such a way that customers were not entitled to a ‘cooling off’ period, and
• Failed to give customers what they had bargained for.

In the case of APD Leisure and Marketing Ltd, the court also found that the company had used the name and logos of an unconnected company to mislead customers to think that the company was bigger and better connected than in fact was the reality.

Commenting on the disqualifications, Ken Beasley, Official Receiver at the Insolvency Service’s Public Interest Unit, said:

“Mr Wild was responsible for the unacceptable trading practices of the APD companies. Many customers were pressurised into paying for holiday club memberships and later found they were unable to book the holidays they had signed up for.

“This nine-year disqualification sends a strong message that The Insolvency Service will put a stop to businesses and individuals who engage in the unfair treatment of customers and creditors.

“The Insolvency Service will take tough action against culpable directors to protect the public and the business environment.”

APD Leisure and Marketing Limited was incorporated on 15 February 2003. The company was wound up by the Court on 24 March 2010. There were no assets and an estimated deficiency to creditors of £436,612.

APD Leisure Group Limited was incorporated on 16 March 2009. The company was wound up by the Court on 5 May 2010. There were no assets and an estimated deficiency to creditors of £118,176.

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Banks have cut the amount they lend to retailers by another 5.7%* in the last year, reducing outstanding loans to the sector from £16.47billion to £15.53billion says Wilkins Kennedy LLP, the Top-20 accountancy firm. Lending to all businesses in the UK fell by only 0.1% in the same period.

The value of loans outstanding to retailers has now fallen 18.7%, or £3.58billion, over the last three years, from £19.12billion at the end of 2009.

The last six months has seen a rise in the number of high profile retailers such as Comet, HMV, Jessops, Blockbuster and Republic being forced into administration.

Anthony Cork, Partner at Wilkins Kennedy, says: “Banks have been reducing their exposure to the retail sector far faster than they have to other parts of the economy.”

“The recent retail sector insolvencies will have added to the view amongst banks that they are still over-exposed to this struggling sector. The banks have been very patient with the sector but that patience is wearing thin.”

Anthony Cork adds: “Retailers are having to deal with a shrinkage in consumer spending, stubbornly high property overheads and steadily increasing competition from the internet. Unfortunately, the lack of available bank finance is just going to make the situation worse for retailers.”

Wilkins Kennedy adds that more retailers are turning to their landlords and asking them to step in and help by reducing rent burdens.

Anthony Cork explains: “If a retailer disappears from the High Street, the landlord is left with an empty unit and no rent. In the current economic climate, units can stay vacant for a long time so it is in the interest of landlords to help.”

“If a retailer can’t get credit from their bank or their suppliers they will have to turn to their other major creditor – the landlord.”

“So far, the issue of excess property rents has been dealt with by lengthy and complex negotiations over CVAs or short-term rent holidays. Retailers would rather see landlords take a quicker and more pragmatic response to the issue of property overheads.”

Anthony Cork explains that “rent holidays” offered by landlords are often viewed as an inadequate response from landlords as these are usually only an offer to defer rent payments rather than being an actual reduction in the level of rent payable.

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

Activity in the UK’s manufacturing sector unexpectedly shrank in February, according to a closely watched survey.

The Markit/CIPS purchasing managers’ index (PMI) for manufacturing fell to 47.9 last month, from a downwardly revised 50.5 in January. It was the first reading below 50 – which indicates contraction – since November.

In June 2010 manufacturing in the United Kingdom accounted for 8.2% of the workforce and 12% of the country’s national output. This was a continuation of the steady decline in the importance of manufacturing to the economy of the UK since the 1960s, although the sector was still important for overseas trade, accounting for 83% of exports in 2003.

The East Midlands and West Midlands (at 12.6 and 11.8% respectively) were the regions with the highest proportion of employees in manufacturing. London had the lowest at 2.8%.

Bad weather at the end of January and a larger than expected disruption caused by the Chinese New Year holiday on global trade flows saw new orders fall for a second successive month.

Staffing levels in the sector dropped at their quickest pace in more than three years. The degree of job shedding was the fastest for 40 months, it added, with large-sized enterprises making the steepest cuts.

“The return to contraction of the manufacturing sector is a big surprise and represents a major setback to hopes that the UK economy can return to growth in the first quarter and may avoid a triple-dip recession,” said Chris Williamson, chief economist at Markit.

But Mr Williamson added that there were good reasons to believe that manufacturing might pick up again in March.

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.