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.

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.

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.

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.

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