A textile company is trading strongly, over nine months after it could have hit the rocks.
Softex International Limited, based in Leicester, imports yarns for knitting with the final products ending up in the stores of Burberry, M&S, John Lewis, Laura Ashley, Debenhams, and New Look. In November last year, the firm was threatened with financial turmoil after one of its customers, a fashion manufacturer, went into administration.
However, they received a pay out from trade credit insurer Atradius for over £55,000 which kept the business afloat. Today, Softex is continuing to trade successfully in the region.
Kiran Yarashi, managing director of Softex which was established 15 years ago, said:
“In an already extremely tough textile environment in the UK, had we not been able to recover this defaulted payment from Atradius, we would have been facing a very difficult financial situation ourselves.
“The administration was unexpected. It was a long-standing customer with a reported turnover of £15m and there were no signs that it was about to go under. The loss would have left a big hole in our finances and we couldn’t have continued operating without the claims payout from Atradius.”
Softex’s experience demonstrates that you can never assume that you’re safe from the risks of insolvency. In an economic report earlier this year, Atradius predicted that there would be little improvement to the UK insolvency climate in 2016 despite being another year on from the recession. The volatility of recent weeks following the referendum is unlikely to have improved the predicted outlook with pre-Brexit forecasts indicating that insolvency levels in England & Wales were expected to hit 12,725 in 2016. While below the 12,855 compulsory liquidations and creditors’ voluntary liquidations recorded last year, the drop is small at just 1%. High profile insolvencies already this year include BHS and Austin Reed. However, as Softex has experienced it is not only the failure of high-profile customers that can cause a financial headache.
Tanya Giles, Regional Manager at Atradius, said: “The economy grew 0.6% in the three-month period to the end of June. However, as we review the impact of the weeks following the referendum we need to bear in mind that the effects of the recession continue to cast a shadow with business insolvencies still running at troubling levels. Businesses can be significantly impacted when they do not get paid. Insolvencies are brutal and leave a trail of destruction along the supply chain. Small businesses are particularly at risk as they may not be able to sustain the financial impact of unpaid invoices, nor indeed the loss of a customer from their book.
“However, while some insolvencies may be a shock, there will often be tell-tale signs of an impending failure. The warning signs include customers failing to pay on time, permanently taking advantage of full credit lines asking to prolong overdue bills, changing banks or offering bills of exchange in lieu of payment.
“The biggest single thing a business can do to mitigate the risks of non-payment is to protect themselves. Trade credit insurance provides simple, cost effective protection to your business against the risk of not getting paid. If you can’t get paid, for instance if your customer becomes insolvent, defaults on the payment or is affected by political risk, you can make a claim to Atradius, reducing the need for bad debt provision and releasing money back into the business.”
As a trade credit insurer, Atradius protects businesses from the risks of non-payment and also advises businesses on trading risks and opportunities in the domestic and export markets using intelligence gathered from millions of firms around the world.
MrYarashi, of Softex which has been a customer of Atradius for a decade, added:
“Atradius is always opening up limits for new customers for us. For instance, when I had the opportunity to supply a multimillion pound turnover company, I wanted to ensure I could supply them with whatever they needed – with the right protection. Atradius gave me a large credit limit and we could start doing business immediately. That year, we turned over £1m of business with that company; Atradius played a major role in our business’ success. I would always take the opinion of Atradius whether to supply a customer as they can advise if I’m likely to get paid or not – and I don’t want to take a hit. They help me decide where to do business and where not to do business.”
Kiran Yarashi has further appreciated the support extended by long term dedicated Account Manager – Claire Bowen who understood his business and extended maximum support. Adjusting the policy premiums, extending maximum credit periods, quick and positive support for credit limits for customers where business was possible are some of the instances. This kind of an excellent understanding of the client’s business by this dedicated manager helped Softex to sail through difficult times.
Sunak to use budget to expand apprenticeships in England
LONDON (Reuters) – British finance minister Rishi Sunak will announce more funding for apprenticeships in England when he unveils his budget next week, the government said on Friday.
Employers taking part in the Apprenticeship Initiative Scheme will from April 1 receive 3,000 pounds ($4,179) for each apprentice hired, regardless of age – an increase on current grants of between 1,500 and 2,000 pounds depending on age.
The scheme will extended by six months until the end of September, the finance ministry said.
Sunak will also announce an extra 126 million pounds for traineeships for up to 43,000 placements.
Sunak’s March 3 budget will likely include a new round of spending to prop up the economy during what he hopes will be the last phase of lockdown, but he will also probably signal tax rises ahead to plug the huge hole in the public finances.
Sunak is also expected to announce a “flexi-job” apprenticeship scheme, whereby apprentices can join an agency and work for multiple employers in one sector, the finance ministry said.
“We know there’s more to do and it’s vital this continues throughout the next stage of our recovery, which is why I’m boosting support for these programmes, helping jobseekers and employers alike,” Sunak said in a statement.
(Reporting by Andy Bruce, editing by David Milliken)
UK seeks G7 consensus on digital competition after Facebook blackout
LONDON (Reuters) – Britain is seeking to build a consensus among G7 nations on how to stop large technology companies exploiting their dominance, warning that there can be no repeat of Facebook’s one-week media blackout in Australia.
Facebook’s row with the Australian government over payment for local news, although now resolved, has increased international focus on the power wielded by tech corporations.
“We will hold these companies to account and bridge the gap between what they say they do and what happens in practice,” Britain’s digital minister Oliver Dowden said on Friday.
“We will prevent these firms from exploiting their dominance to the detriment of people and the businesses that rely on them.”
Dowden said recent events had strengthened his view that digital markets did not currently function properly.
He spoke after a meeting with Facebook’s Vice-President for Global Affairs, Nick Clegg, a former British deputy prime minister.
“I put these concerns to Facebook and set out our interest in levelling the playing field to enable proper commercial relationships to be formed. We must avoid such nuclear options being taken again,” Dowden said in a statement.
Facebook said in a statement that the call had been constructive, and that it had already struck commercial deals with most major publishers in Britain.
“Nick strongly agreed with the Secretary of Stateâ€™s (Dowden’s) assertion that the governmentâ€™s general preference is for companies to enter freely into proper commercial relationships with each other,” a Facebook spokesman said.
Britain will host a meeting of G7 leaders in June.
It is seeking to build consensus there for coordinated action toward “promoting competitive, innovative digital markets while protecting the free speech and journalism that underpin our democracy and precious liberties,” Dowden said.
The G7 comprises the United States, Japan, Britain, Germany, France, Italy and Canada, but Australia has also been invited.
Britain is working on a new competition regime aimed at giving consumers more control over their data, and introducing legislation that could regulate social media platforms to prevent the spread of illegal or extremist content and bullying.
(Reporting by William James; Editing by Gareth Jones and John Stonestreet)
Britain to offer fast-track visas to bolster fintechs after Brexit
By Huw Jones
LONDON (Reuters) – Britain said on Friday it would offer a fast-track visa scheme for jobs at high-growth companies after a government-backed review warned that financial technology firms will struggle with Brexit and tougher competition for global talent.
Finance minister Rishi Sunak said that now Britain has left the European Union, it wants to make sure its immigration system helps businesses attract the best hires.
“This new fast-track scale-up stream will make it easier for fintech firms to recruit innovators and job creators, who will help them grow,” Sunak said in a statement.
Over 40% of fintech staff in Britain come from overseas, and the new visa scheme, open to migrants with job offers at high-growth firms that are scaling up, will start in March 2022.
Brexit cut fintechs’ access to the EU single market and made it far harder to employ staff from the bloc, leaving Britain less attractive for the industry.
The review published on Friday and headed by Ron Kalifa, former CEO of payments fintech Worldpay, set out a “strategy and delivery model” that also includes a new 1 billion pound ($1.39 billion) start-up fund.
“It’s about underpinning financial services and our place in the world, and bringing innovation into mainstream banking,” Kalifa told Reuters.
Britain has a 10% share of the global fintech market, generating 11 billion pounds ($15.6 billion) in revenue.
The review said Brexit, heavy investment in fintech by Australia, Canada and Singapore, and the need to be nimbler as COVID-19 accelerates digitalisation of finance, all mean the sector’s future in Britain is not assured.
It also recommends more flexible listing rules for fintechs to catch up with New York.
“We recognise the need to make the UK attractive a more attractive location for IPOs,” said Britain’s financial services minister John Glen, adding that a separate review on listings rules would be published shortly.
“Those findings, along with Ron’s report today, should provide an excellent evidence base for further reform.”
Britain pioneered “sandboxes” to allow fintechs to test products on real consumers under supervision, and the review says regulators should move to the next stage and set up “scale-boxes” to help fintechs navigate red tape to grow.
“It’s a question of knowing who to call when there’s a problem,” said Kay Swinburne, vice chair of financial services at consultants KPMG and a contributor to the review.
A UK fintech wanting to serve EU clients would have to open a hub in the bloc, an expensive undertaking for a start-up.
“Leaving the EU and access to the single market going away is a big deal, so the UK has to do something significant to make fintechs stay here,” Swinburne said.
The review seeks to join the dots on fintech policy across government departments and regulators, and marshal private sector efforts under a new Centre for Finance, Innovation and Technology (CFIT).
“There is no framework but bits of individual policies, and nowhere does it come together,” said Rachel Kent, a lawyer at Hogan Lovells and contributor to the review.
($1 = 0.7064 pounds)
(Reporting by Huw Jones; editing by Jane Merriman and John Stonestreet)
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