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Wednesday, 16 April 2014

Albemarle & Bond bought out of administration

The UK pawnbroker has been bought by former Chief Executive of the Bank of Scotland, Sir Peter Burt, as part of an investment group, led by Promethean Investments.

PwC have been handling the administration of the PLC since the end of March, when lenders could no longer back the business and the pawnbroker admitted it couldn't pay the £51 million debt owed.

Over 600 jobs have been rescued with the take over of 128 branches. The remaining 59 stores will likely close, leaving 181 jobs at risk. However it has been suggested staff will be transferred to the other stores.

Joint administrator, Mike Jarvis, commented "The deal announced today was the best offer received, preserving the most jobs and keeping the most stores open. All 120,000 pledged items remain safe and available for the customers to redeem".

Overall, good news for Albemarle & Bond. With the recent struggle and fall in gold prices, perhaps it's best they now refocus on pawnbroking and steer clear of buying and selling gold.

Tuesday, 15 April 2014

Inflation rate falls to 1.6%, lowest since 2009

According to the Office of National Statistics, the inflation rate (measured by the Consumer Price Index) fell from 1.7% in February to 1.6% in March, still well below the government's target of 2%. It's the lowest rate since 2009 and has been falling consistently over the last few months.

The Retail Price Index (RPI) fell from 2.7% to 2.5% due to the 'smaller rise' in clothing prices. The gap between wages and prices is continuing to narrow, indicating consumer power is coming back, which can only be a good thing for retailers. Will the fall in inflation continue?

Monday, 14 April 2014

West Cornwall Pasty Co in pre-pack deal

Pie seller, West Cornwall Pasty Co, entered administration on Friday 11th April and was shortly afterwards sold in a pre-pack deal by private equity firm, Enact - saving 274 jobs. Read more in our news piece below:

If you are an employee of the company, direct your queries to PwC, who are handling the pre-pack administration. For employees rights' in insolvency, check out our video below:

Friday, 11 April 2014

What are Fixed and Floating Charges?

When a company borrows money, the lender (e.g. bank) usually takes some “security” for that debt as they want to be protected in case the borrower fails to repay debt in the future. If this happens, two types of charges, fixed and floating, can protect the lender.

What is a fixed charge?

The bank may have lent money to the company to acquire an asset like a building or vehicle, for example. The company cannot sell this without the lender’s permission and the debt must be repaid as agreed to in the loan agreement or facility letter.

Like a mortgage, you cannot sell the house without the lender's permission and debt must be repaid in full before you can own your home. This is a type of fixed charge.

A company’s debtor book (including factoring or invoice discounting) can also be a fixed charge. If the bank or factoring company has bought outstanding invoices and lends money against them, then these book debts belong to the lender, not the company.

What is floating charge? 

Where a lender cannot get security in the form of a fixed charge, it will usually take a floating charge against the company’s remaining assets. For example:

Work in progress
Unfactored debtors
Fixtures and fittings
Vehicles or assets not subject to fixed charges

It would not be practical to put a fixed charge over every item of stock or desks and chairs so these are left to floating charges.

Read more in our guide to debentures and examples of fixed and floating charges

Thursday, 10 April 2014

A guide to debt collecting

"My debtors are slow, or won't pay me, how do I improve debtor collection"?
This is a common question from our callers. Follow some of our tips below to help improve collecting payments.

Dealing with late payment

1.Introduce a strict policy for debtor collection built around specific target dates.

2.Assertively collect debts – it is your working capital

3.Take references up on new customers – most do not. We are amazed at how many businesses fail to ask for references, how many fail to read and act upon any they get and how lax credit limit enforcement is when faced with "iffy" references.

4.Buy a subscription to a credit reference agency early warning system. This is particularly important if you regularly open new accounts and or large accounts. It is so cheap to do and can save you, literally, thousands of pounds.

5.Refuse to supply even if a "good " customer is over limits, call them and ask what the problem is. Do they have the invoice, delivery note and are they satisfied? If yes ask for your money. If they still don’t pay consider issuing:

5.1. Final warning letter - you will commence action if you do not hear within 7 days - this helps establish that the debtor accepts the debt.

5.2. Obtain a County Court Summons form from your local court; issue a copy of it with all details correctly filled in. (We are amazed at how many people go to the bother of issuing half filled out forms!)

5.3. Tell the debtor you will issue the summons in 5 working days unless they pay. If this fails:

5.4. Issue the summons to the court. After judgment is granted call the debtor for the money. If this fails:

5.5. Proceed with a warrant of execution - basically an instruction to the court to collect the money (they send a bailiff to do this). If this fails:

5.6. Consider a winding up petition if the debtor is a company or a bankruptcy petition if the debtor is a sole trader or individual.

5.7. Up to the last step above this is a relatively inexpensive way of debt collecting

6.Build a collection system, use "Sage" or other accounts package or use a manual system with trigger dates for every invoice.

7.Charge interest – its your money.

8.Go to the customer's premises and demand to meet the owner, MD or finance director. Say you will not leave until the company gives you a cheque, even if its post dated.

Remember a good customer who does not pay is not a good customer long term!

Tuesday, 8 April 2014

Paul Simon administration: 17 stores to close

The home furnishings retailer which went into administration last week will have to close 17 stores, say administrators from Deloitte.

The company which specialises in carpets, curtains and furniture and has 51 stores, mainly in the South and South East, called in administrators last week after the impact of the recent floods led to decline in sales and cashflow problems. Together with this and already difficult economic conditions, the retailer felt administration was the best way to safe-guard the business while restructuring plans were prepared.

Lee Manning and Nick Edwards were appointed joint administrators on the 2nd April and have since come to the decision to close 17 loss-making stores in the next three weeks to encourage a sale for all or parts of the business as a going concern.

The following stores will be closing:
  • Aylesbury
  • Banbury
  • Bedford
  • Bournemouth
  • Daventry
  • Dunstable
  • Gillingham
  • Great Yarmouth
  • Luton
  • Margate
  • Portsmouth
  • Reading
  • Sittingbourne,
  • Strood
  • Wimbledon
  • Worcester
  • Worthing
If you are an employee of the retailer and you're concerned about the future, please have a look at our video on employee rights in insolvency. Contact Deloitte who are handling the administration if you have any specific questions

Monday, 7 April 2014

Employment Allowance is open for business

From yesterday (6th April 2014), around 1.25 million businesses and charities will now be able to benefit from Employment Allowance. Employers can reduce National Insurance contributions (NIC) by up to £2000, paying less or in deed nothing to HMRC for their employees.

If you pay less that £2000 every year in NIC, you will no longer need to pay anything.  It’s estimated around 450,000 businesses can now stop making payments.

Any businesses, charities and amateur sports clubs that pay class 1 National Insurance contributions are eligible – use the government’s handy calculator to check how the allowance affects your business. Note that public authorities cannot claim. Furthermore, if you are in a group of companies, only one company is entitled to the allowance.

You can use your current payroll software to claim.

This is great news for small businesses and is a welcoming approach from the government to help alleviate financial struggle.

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