Category Archives: News

Local Bank Managers Have Hands Tied

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When the Bank of England revealed recently that lending to smaller businesses fell well short of pledges previously made, the Government warned the country’s major banks that it wants to see a “significant improvement”.

The importance of SMEs cannot be underestimated. They now account for 99.9 per cent of all enterprises. They also accounted for more than half of employment (59.1 per cent) and almost half of turnover (48.6 per cent) in the UK private sector, at the start of 2010, according to statistics issued by the Department for Business Innovation and Skills (BIS). So it stands to reason that the growth which our economy desperately needs is reliant on the wellbeing of SMEs.

With this in mind, you would imagine the banks would be suitably humble and would outline how they were going to address this. Instead their collective voice – The British Bankers’ Association – blamed ‘muted demand’.

But there is an abundance of anecdotal evidence from SMEs of lengthy delays by banks in responding to finance requests, of long shopping lists of pre-requirements, of unreasonable terms being offered or a straight forward answer of ‘no’. Many consider there to be little chance of the banks agreeing to lend.

Imagine there were a shortage of bread and each day you trudged from shop to shop, day after day, without success. Eventually you would give up and look for an alternative – or simply starve. And the bread shops would experience “muted demand”. SMEs are being forced to look elsewhere. Starved of cash they are turning to invoice finance, private investors or re-financing plant, equipment and other fixed assests.If none of these are available or appropriate then as a survival strategy business owners are turning to insolvency professionals rather than lose their businesses.

It’s time the banks honoured their pledges and started to support SMEs, which are not ‘blue chip’ but have a viable business plan to trade out of their difficulties. The banks have experienced staff at ground level who have the skills to manage the more marginal businesses but in most cases their hands are tied by reluctant senior bank executives.

Who’d Be a Shopkeeper?

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Latest statistics from the Insolvency Service suggest that now is not a good time to be “a nation of shopkeepers”. This supposedly derogatory remark is usually attributed to Napoleon but in fact was used earlier by the famous economist Adam Smith in The Wealth of Nations.

Corporate insolvencies (includes all processes) in Q1 of 2011 show an increase of some 55% compared to the same period last year for companies in the wholesale and retail sectors. Traditionally, businesses which are already struggling and are in the retail sector often see the busy Christmas and sales season as a last chance of survival. The quiet period which follows is when many businesses fail. But poor weather hit sales in the run up to Christmas 2010.

Perhaps the biggest issue is confidence by the public. The combination of high unemployment and concern over job security, the VAT increase in January and anxiety over the impact of government cutbacks has seen the man-in-the street tighten his belt.

The latest statistics have shown a substantial rise in the number of retail administrations and retail company voluntary arrangements (CVAs) for the first quarter of 2011, compared with the last quarter of 2010. Administrations in retail have seen a 55% jump from 80 in the Q4 2010 to 124 in Q1 2011, while CVAs in retail have risen by 30% from 23 in Q4 2010 to 30 in Q1 2011. The overall number of administrations was up by nearly a quarter from 642 in Q4 2010 to 782 for Q1 22%.

If you own a retail business and are worried, visit our web site at www.wilsonfield.co.uk or for free advice ring Freephone 0800 458 3320 .

Wilson Field Are Recruiting

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We are looking for an experienced insolvency administrator for the job position ‘Voluntary Agreement Drafter’.   For more information on Wilson Field please visit our website – http://www.wilsonfield.co.uk/

The job description is on the ‘About us’ page in the Recruitment section.  If interested, please contact us via E-mail or by telephone. Job description is available on http://www.wilsonfield.co.uk/about-us/recruitment

The Royal Wedding – Economic Winner or Loser?

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Ok so now the pomp and ceremony is over and normality has returned, will the Royal Wedding provide a long term boost to the country’s economy or was it just a good day out? Will there be a feel good factor or does the country still feel as blue as Tara Palmer-Tompkinson’s outfit?
No consensus seems to have been reached and, in truth, even in a years’ time due to the many differing angles of assessment it will still be difficult to totally quantify. However, most analysts seem to agree that the extra spending will pump billions into the British economy and create a sense of wellbeing in the middle of an economic downturn. There are though some warnings, a likely reduction in the manufacturing and services sectors and, in particular the high economic costs of the additional bank holiday.
Thankfully, PricewaterhouseCoopers (PwC) did the maths ahead of the big day and the figures made interesting reading, they were a projection based on a simple survey so it remains to be seen how accurate they will be. They predict that the possible commercial benefit to London from the wedding could be as high as £107m from visitor expenditure alone.
That sum was derived from the 500,000 people that were expected to descend on Westminster to experience the wedding in person. A further million are estimated to have watched on big screens in Hyde Park. Overall, it was anticipated that as well as 295,000 Londoners there would also be 560,000 adults from around the UK who planned to travel into the centre of the capital for the day.
Further economic benefits will come from those people spending while they are in London. While 37 per cent of visitors will stay for only a single day, 185,000 people will stay in hotels, 50,000 in B&Bs and 18,000 with friends. Two thirds of the visitors will take advantage of the capital’s retail spots and go shopping and 58 per cent plan to visit tourist attractions, 60 per cent will go to the pub, 45 per cent to nightclubs and 40 per cent to restaurants. A confident 7 per cent will even wish to share the happy couple’s good luck by visiting a casino during their stay.
In retail a huge boost is anticipated throughout the UK as shoppers snap up wedding-related goods to help celebrate. According to a Sunday Times report Asda, Sainsbury’s and Tesco estimate they will have sold 500 miles of bunting. Tesco believes consumers will spend more than £20m on top of their normal May bank holiday expenditure, with many streets parties planned. The multitude of commercial spin-offs extends to Hotels offering royal wedding packages, jewellers big and small cannot stock enough replicas of Princess Diana’s engagement ring and a brewery is even offering a Kiss Me Kate beer! It remains to be seen if there will be a post –wedding demand for Princess Beatrice hats.
Analysts predict the overall boost from the wedding will boost the recession-hit tourism and retail sectors, by a staggering £1 billion.
So everyone is happy aren’t they? Well not quite.
Many companies believe that the impact of allowing employees to take the day off for the Royal Wedding will be detrimental to their organisation. In fact, the CBI has estimated that the additional cost of an extra Public Holiday is likely to cost the British economy approximately £6 billion in lost productivity. This could be exacerbated as the 29th April lies between 3 other Public Holidays in 11 days, many workers are also expected to call in sick. For a small company, this could amount to a shutdown for the period. Put into perspective, the total cost is around 1.5% of the UK economy’s overall output for the quarter. Amid rising unemployment, surging inflation and brutal government austerity measures, the extra holiday could not come at a worse time, says the Federation of Small Businesses.
There is also likely to be a further potential hit in the manufacturing and services sector. The research showed that, the Queen’s Golden Jubilee in June 2002 when the country also took a day off for a royal celebration, resulted in growth in June plunging compared with growth in every other month of the year.
With many world leaders and a huge crowd attending the wedding, there are also the obvious questions over the cost of security. The government is not releasing figures of the security operation but the wedding of Prince Charles and Lady Diana in 1981 was estimated to cost about £30m, not adjusted for 30 years worth of inflation.
The government will no doubt hope that the feel good factor particularly in these times of austerity and what almost appears to be wave after wave of cost cutting will be long lasting. It is believed that while many citizens are directly affected by the recession there are also those who are merely affected by the general sense of doom and gloom. Good feelings triggered by the wedding could well motivate this group of people to increase their spending.
So what of future events? a PwC economist recently stated as well as the benefits discussed, the wedding will be a good indicator of the potential economic benefits of the Olympic games, when more than ten times the number of visitors is expected. Unlike next year’s Olympics, London only has to host the extended population of wedding guests and visitors for a short time.
Along with an anticipated further public holiday for the queen’s diamond jubilee and the Olympics next year, VisitBritain believes the fanfare over the wedding is set to create a bumper couple of years for the economy and could be the key to a £2bn tourist-driven economic boom.

Our New Website

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Take a look at our new website - www.wilsonfield.co.uk We have freshened it up, made in easier to navigate – we’ve even added a video as well as a “live help” button so that (if you wish) you can access our advice service and speak directly to one of our friendly advisers on a video link.

And there are plans to add more features in coming months.

If you have any financial worries, whether they relate to personal finance or a business issue, please do not hesitate to contact us for free advice on Freephone 0800 458 3320.

Stimulating Growth in the Economy

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It is reassuring to see references to “growth” emerging in political speeches instead of the constant mention of spending cuts. The economy desperately needs to grow in order to generate wealth and create employment. Although nobody can question the need to cut back on public expenditure, opinions are still split as to whether or not the cuts are “too much too soon”. The economy is already very fragile and the real impact of the cuts is still to be felt. Q4 saw an unexpected fall in GDP which was partly attributed to the snow but economic output was significantly less than predicted.
Whilst growth is certainly needed, it is unclear from where the demand for products and services necessary to stimulate growth will come considering that unemployment is high and still rising. Exports are a possible answer but we mainly export to countries which are also struggling economically rather than the emerging giants – India and China, who tend to export to us.
And there is the thorny issue of funding growth when the banks are still reluctant to lend. Most SMEs – the relatively small businesses which form the backbone of the UK’s economy – are finding it almost impossible to raise affordable finance.
It all points to a tough and uphill struggle for quite some time before the country is back on its feet.
If you have been affected by the recession or the impacts of cuts in public spending and are facing financial problems, whether you are a business owner or an individual telephone Freephone now on 0800 458 3320 and ask for Phil for an informal, no-obligation chat or visit our website at www.wilsonfield.co.uk .

Heavily Borrowed Businesses Most Vulnerable to Interest Rate Rise

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Recent reports from the February minutes of the Monetary Policy Committee (MPC) that three of the nine members voted in favour of an increase in base rate have sparked some suggestions that interest rates will soon increase. I’m not convinced.
Firstly, inflation is broadly in line with the Bank of England’s predicted peak of 4%, possibly even 5% before falling back.
One of the driving forces behind current inflation is increased costs of many foodstuffs, raw materials and fuel on worldwide markets. Increasing interest rates usually tackles inflation by increasing the cost of borrowing to quell consumer demand. It also makes the return on investment by businesses less attractive if borrowing costs are higher. But current borrowing levels (always assuming you can find a bank willing to lend) bear little relationship to bank rate. The days when professionals such as doctors could borrow at 1% above bank rate are long gone. And there was a time when if you were an SME paying 4% ABR for your overdraft you felt you were being ripped off. Now 10% and 11% are not uncommon coupled with regular review fees.
But the writing is on the wall in the longer term for businesses which are heavily reliant on borrowed funds as inevitably rates will increase at some point. I suspect it will be a gentle rise (unlike the explosive increases seen in the 1980’s when rates doubled over a number of months to around 15%), but nevertheless a gradual increase can still put vulnerable businesses at risk.

If you are running a business and are already struggling with cash flow at a time when interest rates are the lowest for decades then you need to take professional advice without delay. Postponing taking that proactive step can seriously reduce the options available to turnaround your business and it can increase the likelihood of business failure. Contact Wilson Field’s free advice line – 0800 458 3320 or visit the web site at www.wilsonfield.co.uk

Wilson Field Opens Manchester office

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Wilson Field, business turnaround and insolvency specialist has expanded its presence in the north with the opening of its Manchester office.

Wilson Field Ltd, which operates nationwide and is based in Sheffield, has seen consistent growth and financial success since it began trading in 2001, and will now also operate out of a city-centre base in Manchester’s Spinningfields – an area occupied by banks and other high-profile businesses.

The new venture comes six months after the opening of the company’s Leeds office, which has already achieved significant success and is witnessing an influx of business leads as its profile continues to grow.

Last year the company achieved a turnover of £4m and increased its workforce by 20 per cent. The growth comes in spite of figures which have shown a dramatic downturn in insolvencies across the UK, as reported by the Government Insolvency Service fourth quarter figures stating liquidations are down 15.9 per cent on the same period in 2009.

The new office will be headed up by Graham Ingham, 44, from Preston, who has more than 20 years experience across the financial industry. He has key contacts with Manchester’s asset based lenders, banks, accountants, law firms and businesses and joins Wilson Field from Begbies Traynor.

Nick Wilson, managing director of Wilson Field Ltd, said: “I see this as a natural progression for the company. Manchester is the biggest city in the north and I’m thrilled that we are able to take the next step in developing the Wilson Field brand in such a thriving business community.

“Graham has a wealth of commercial experience, a proven track record in sales and business development and a large database of professional contacts. He will be raising the profile of Wilson Field in the North West and I am confident that this combined with other marketing efforts will result in more business.”

Graham said: “It’s great for Wilson Field to have a presence in the North West and replicate the success the company already has in Yorkshire. The business has grown against the trend in the insolvency industry where many have become stagnant and this is very much down to the strong team they have in place in Sheffield.

“I know the area very well and already have strong links with the business community and I’m thrilled to have the chance to use my knowledge to help develop such a forward-thinking company.”

Tough Months Ahead…

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In the past week we have seen indications of hard times in the coming months.

Figures released show annual inflation at 3.7%. This has been caused by a combination of factors, many of which are expected to stay with us in the foreseeable future – increasing costs of fuel and energy, commodities and raw materials (including many metals). Natural disasters have hit the harvests of many basic foodstuffs, reducing supply and pushing up prices. And we can expect to pay more for our clothes driven by the increased cost of cotton and the fact that workers in the Third World deserve and are starting to demand higher wages. Perhaps a less obvious factor is that since the start of the financial crisis in 2008 Sterling has lost some 30% in value against the US dollar and 17% against the Euro. In simple terms we are having to pay more for imports – adding to inflation. This is not just higher prices for imports for consumers but also increased costs to businesses which import raw materials or components as part of their production process. On a positive note, exporters who price their goods in sterling will benefit as their goods become cheaper in overseas markets. Unfortunately, many of the countries which are the UK’s main customers are in Europe and their own economies are “feeling the pinch”.

Add to the above the fact that we have yet to see what impact the fuel and VAT increases will have just adds to the gloom. Some estimates suggest that inflation may peak at 4% or even 5% this year. At this stage there is little indication that wages are following suit with many employees may face an unofficial pay freeze. The end result, in the short term at least, is likely to be a “tightening of belts” by consumers as real spending power shrinks.

As far as consumers are concerned, inflation hits hardest those on fixed incomes, such as pensioners. However, with unemployment rising and the prospects of more job losses following public spending cuts wages are unlikely to keep pace with inflation, so the real spending power of our cash will diminish.

Businesses will not escape either. The increasing cost of raw materials and components can cause cash flow problems and if the business is in a price-sensitive market it may be difficult to pass on some or all of the cost increases.

If you are feeling the impact of inflation either on your personal finances or your business, don’t delay speak to an expert from Wilson Field’s free advice line on 0800 458 3320 or visit their web site at www.wilsonfield.co.uk

VAT Increased by 14% – Happy New Year!

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Whoever you blame for the current global crisis, the fact is that it is now payback time. The latest doses of medicine are being administered in the UK – fuel tax and VAT increases. There are differing opinions as to just how these will impact on various sectors of the economy.
The people who ultimately pay VAT are consumers – you pay VAT, I pay VAT. Those collecting VAT from us – retailers, pubs, restaurants, etc., have two options, the first being to pass on the increase and put up prices. What is unknown is to what extent that would suppress demand for goods and services and cause the economy to contract. And there are fears that some retailers may increase prices by more than the VAT increase, particularly if manufacturers pass on additional transportation costs.
If business owners fear that their market is too price-sensitive and that passing on the increase will hit sales volumes, they may try to absorb the increase. Clearly that would have a direct impact on their margins – unless they can cutback overheads, the most obvious being the wage bill.
“Borrowing your way out” of a problem used to be a potential option for businesses facing temporary problems, but with the future uncertain and lenders ultra cautious this is unlikely to be an available possibility.
Many businesses which have been struggling and are hanging on by their fingernails may find the VAT increase is the final straw. Another 2½% doesn’t sound a great deal particularly on small purchases – pence in many cases, but in fact it is an increase in the taxation rate of some 14%. It is true that many companies depend on unpaid VAT to fund cash flow. At the end of the next quarter, assuming sales volumes remain constant, potentially they will be facing a massive 14% increase in their VAT bill.
It is obvious that the increase in VAT is going to have far-reaching consequences for consumers, for businesses owners and the economy as a whole. So if you are an individual struggling financially or run a business which is facing falling sales, a huge VAT bill or other financial problems, take advice without delay about ways of trying to save your business. Phone Freephone now on 0800 458 3320 and ask for Phil or visit our web site at www.wilsonfield.co.uk