While the uncertain impact of volatile market conditions, and of course Brexit, remain to be seen, businesses of all sizes are having to adapt to become more flexible than ever before. Even the most well-established businesses with enough capital to sustain sudden expenses, are reviewing what were previously assured and predictable growth plans. Philip Sugden, Operations Director at Portal Group UK, explains more for Finance Monthly below.
A business’s property profile is one of the most costly financial investments to be made and over the years the associated fixed rental rates are amongst the standard steps taken in establishing a solid presence for your business.
That cost certainty however, came at a price of the flexibility that is now critical in the modern and reactionary market place.
New businesses are growing at an entirely unpredictable rate while some large established businesses are seeking the autonomy to customize a workspace to better respond to supply and demand. However, with office space at a premium, both large and SME businesses are finding it harder to find a premises that can fill their present and future without breaking the bank.
The possibility that you might need to expand, reduce, reallocate or relocate your workforce at the speed required, particularly for example in the contact centre environment, is extremely costly and entirely impractical under the traditional office lease.
Whether a business is expanding or simply relocating due to success or commercial needs, budgets can no longer be front-loaded into capital expenditure laden construction or leasing of properties.
When considering the growing need to balance financial flexibility with cost certainty in the UK, it’s also interesting to note that our leasing habits differ vastly from the norm abroad. For example, while companies here have traditionally committed to the surety of long 10, 15 or even 20 year leases, the average is closer to three years in the US or India.
While these short-term lets would be at odds with the business growth plans of most UK businesses, more and more businesses of all sizes are increasingly exploring more flexible yet capex-free models.
The likes of managed office solutions (MOS) financial packages, which combine property acquisition, workspace design, fit out, facilities management and supporting services, reflect the emphasis now being placed on financial flexibility and the more expansive use of fluid operating costs (opex).
With simple, streamlined systems and structured terms, business owners can invest their time, effort and money into their businesses, not bricks and mortar.
Simply put, the new wave of shared offices options are allowing start-ups and multinational businesses alike to not only access all the amenities they need at a cost-certain price, but to work within a flexible financial model that fosters their own unique growth and culture.
With holiday season in full swing, people will either be looking to book something last minute or counting the days until they set off. Aside from dreaming of stunning beaches or culture-rich city getaways, there’s a good chance many of you will be imagining the prospect a nice relaxing beer abroad. On top of that, the world cup calls for a few more pints.
For those who enjoy a tipple on their travels, it’s good to know how much you’re likely to spend – especially in an unfamiliar place. Price comparison experts Money Guru have looked at 29 of the world’s most popular city destinations to produce an essential holiday beer guide.
Their research has identified that the cheapest pint is available in Prague where you’ll only be shelling out £1.17 per beer. At the opposite end of the scale, to get yourself a pint in Dubai you’re looking at £9 each.
Here is the rundown of the top five priciest and cheapest pints you’ll find across the globe.
Top 5 – Priciest Pints
Dubai, UAE - £9
Oslo, Norway - £7
Hong Kong - £6
Singapore - £5.94
New York, United States - £5.32
Top 5 – Cheapest Pints
Prague, Czech Republic - £1.17
Johannesburg, South Africa - £1.63
Taipei, Taiwan - £1.77
Krakow, Poland - £1.79
Rio De Janeiro, Brazil - £2.21.
Iconic tourist destinations like London (£5.19), New York and Paris (both £5.32) seem to be taking full advantage of their popularity by bumping up the cost of beer. Nordic countries also demand higher prices for pints with Copenhagen (£4.81), Stockholm (£5.14) and Oslo (£7) all sitting in the more expensive half of the leaderboard.
An eclectic mixture of destinations populates the middle of the leaderboard with Toronto (£4.10), Barcelona (£4.18), Kuala Lumpur (£3.81) and Tokyo (£3.53) all providing beers at prices that aren’t likely to make people perform a double take.
However, for the more price conscious traveller there are plenty of options available, with a range of popular bucket list destinations including Johannesburg (£1.63) and Rio de Janeiro (£2.21) offering beer prices that won’t break the bank.
There are also some surprises to be found, cities that most would consider to be on the costly end of the spectrum such as Berlin (£2.72) and Seoul (£3.28) are actually relatively reasonable when it comes to beer.
Commenting on the findings, James MacDonald, Head of Digital at Money Guru said: “It’s eye-opening to uncover such a large difference in the price of a pint of beer across the globe. The disparity in cost turns what should be an enjoyable experience into a penny-pinching exercise. Luckily Money Guru’s research highlights the top cities to get more pint for your pound.”
So, whether you’re a beer aficionado, a social drinker or just like a couple every so often, it’s wise to factor alcohol into your holiday budget. For more information on their findings, you can see the entirety of Money Guru’s research here.
So if you clicked this article because you want to know how much the literal world cup trophy costs, it’s currently estimated at a total $10 million, or in fact more than two human figures cast in 18 carat gold, but that’s not what this is about.
For the consumers, the ticket prices alone are eye-watering. Standard category tickets for the knockout stage matches set fans back around £2,458 ($3,249), while the group stages will have cost £2,631 ($3,477) combined. All in all, that’s around 22% of the UK’s average annual salary. Plus, flights at anywhere between £600 ($793) and £1,500 ($1,983) depending on where you are in the world, insurance at £41 ($54), and hotels at around £987 ($1,305) and counting, the cost of the world cup is a small fortune for any individual fans attending the competition.
However, the true cost of the world cup extends far beyond what most can imagine. If you take into account the cost on the host nations, the funds handled by FIFA and national football associations, the money lost in advertising, operations, infrastructure and accommodating resources for businesses worldwide, from an economic perspective the overall break-even after losses and profits is highly questionable.
This year companies in the UK witnessed a blackout the morning after some of the England games; employees just didn’t turn up to work. The estimated loss figure for employees ‘pulling sickies’ reaches £500 million ($661 million) nationwide. After the England Vs Columbia game, millions of football fans were expected to call in sick, and they did. While each individual case may seem like nothing much, all together, a £500 million loss in a day is a big hit for the economy. Realistically, other football fanatic nations may have suffered a similar fate the day after their respective teams played.
But the real cost of the world cup extends much further still, and its biggest catalyst, hosting the 32-nation tournament, touches a sensitive socioeconomic nerve. While the surge of a national team in the tournament can bring a much-needed economic boost, £2.6 billion is expected to flood into the UK economy should England reach the final on July 15th, the true cost of the World Cup is always counted in billions and can cause significant issues for the host country.
The 2014 world cup in Brazil was forecast to positively impact economies anywhere between $3 billion to $14 billion. The positive economic impact of the 2010 world cup in South Africa was estimated at $5 billion; the 2006 world cup in Germany at $12 billion and the 2002 world cup in Japan & South Korea at $9 billion. The 2014 brazil world cup was due to add an estimated $30 billion to Brazil’s GDP between 2010 and 2014.
From TV rights fees to sponsorships and ticket sales, FIFA made $4.8 billion in revenue from the tournament in Brazil, with an expense of $2.2 billion, most of which comprised funding to teams and TV production costs. $100 million of the expense was the legacy payment given to Brazil. This did not however cover the costs of building and renovating 12 stadiums and developing the appropriate transport infrastructure needed to host the world cup. The overall cost of this has been estimated at around $15 billion, most of which was public funded.
On top of this further costs incurred due to overruns, legacy concerns and missed constructions deadlines. Some of the stadiums remained unfinished or untested prior to the launch of the 2014 event. In addition, many protests erupted throughout the country calling out the troublesome impact of the world cup on day to day living in Brazil, from the way public transport was handled to the way policing was affected.
The harsh truth is that many of those stadiums remain unfulfilled and unused now. Sure, they were put to good use during the world cup in 2014, but in 2018 these stand desolate, while basic social services are underfunded and lack the capital for development. Billions in capital that could have not been spent on the world cup. One of the 12 stadiums built is the Arena da Amazônia in Manaus. Situated in the middle of the jungle, without a proper top-flight football team, a 45,000-seat stadium is unnecessary. In order to build this stadium, some parts had to be transported by boat through the Amazonian jungle.
To add to the frustration of Brazilians that year, their world cup team suffered a crushing 7-1 defeat against the Germans in the semi-finals.
After being selected to host the 2018 world Cup back in 2010, Moscow has aimed for Russia to stand out as a global superpower and host the world cup in order to benefit from a big economic boost in the long term. The results of the latter are still to be seen, though in terms of media coverage and PR, Russia has been doing pretty well, with many global fans claiming that from a social and economic stand point, Russia is a far better nation than most believe it to be.
We’re currently just past the half way line in the 2018 Russia world cup and the cost is already mounting. The overall cost of Russia hosting the world cup is reported at $14.2 billion, making it the most expensive in history thus far. Russian media channels report that most of this cost consist of repairs and renovation to existing airports and transport systems as well as building 12 new stadiums, 11 new airport terminals, 12 new roads and three new metro stations in the run up to the competition. To support these, further infrastructure such as hospitals, power stations, and hotels were also injected with cash. Clearly, Russia thought it had better odds than Brazil when it came to the long-term economic advantages of hosting the world cup.
In terms of sponsorships, of 34 potential slots offered by FIFA for the 2018 world cup in Russia, 19 were filled, mostly by Russia themselves, and China (despite not even having a team in the tournament) and Qatar. KPMG currently estimates sponsorships have made FIFA over $1.6 billion. Statista has estimated around 1,000,000 foreign fans to attend the games from the first kick off to the final whistle, with a further 2 million domestic fans in the mix. FIFA says around 98% of tickets were sold, but this hasn’t always appeared to be the case in some matches.
Once the world cup is over, it’s difficult to say whether Russia’s massive investment, the biggest yet, will reap long lasting benefits from hosting the competition. But if Brazil is to be an example, probably the worst of many, then Russia is arguably set to lose from the deal, at least financially. Although the injection of cash means they will have a few more hospitals and better airports in the long term, from a future football perspective the stadiums that were purposely built for the world cup will likely not bring much revenue back for Russia in years to come, leaving the expenditure as a substantial one-off outlay, albeit it for a very rich country.
At least high hopes still remain for the Russian football team in the 2018 world cup, as they face Croatia this Saturday in the quarter finals. If they win, maybe things will look a little brighter.
The latest research from national audit, tax and advisory firm Crowe Clark Whitehill, together with the University of Portsmouth’s Centre for Counter Fraud Studies (CCFS), reveals a national fraud pandemic totalling £110 billion a year. For context, that figure would build more than 110 Wembley Stadiums, or cover the annual budget for every single local authority in England combined. Put differently, the figure would cover the UK’s Brexit divorce bill almost three times over, or cover the salaries of 4.8 million nurses for a year.
‘The Financial Cost of Fraud 2018’ estimates that the UK economy could be boosted by £44 billion annually if organisations step up efforts to tackle fraud and error.
Globally, fraud is costing £3.24 trillion each year, a sum equal to the combined GDP of the UK and Italy, or enough to build more than 3,000 Wembley Stadiums.
The report, which is the only one of its kind, draws on 20 years of extensive global research from 40 sectors, where the total cost of fraud has been accurately measured across expenditure totalling £15.6 trillion.
Since 2008, there has been a startling 49.5% increase in average losses with businesses losing an average of 6.8% of total expenditure. Driven by technological advances and increasing digitisation, businesses now face a threat which is growing in scale and mutating in complexity.
Fraud is the last great unreduced business cost. Included in the report are examples where fraud has been accurately measured, managed and losses minimised, including a major mining company which reduced losses due to procurement fraud by over 51% within a two-year period, equating to USD 20 million at a time when commodity prices were falling.
Insurance fraud is an another sector to look into. It is happened by changing the beneficiaries. A proper investigation can minimize the vast effect. When any individual is getting life insurance over 75 years, the particular company must go through all the original documentation and proper channels.
Jim Gee, Head of Forensic & Counter Fraud at Crowe Clark Whitehill, comments: “The threat of fraud is becoming increasingly like a clinical virus – it is ever-present and ever-evolving. The bad news is that digitalisation of information storage, and process complexity, coupled with the pace of business change, have created an environment where fraud has thrived, grown and continued to mutate. The better news is that there are examples where organisations have measured and minimised fraud like any other business cost and greatly strengthened their finances.”
“In the current climate, to not consider the financial benefits of making relatively painless reductions in losses to fraud and error is foolhardy. The message to all organisations is measure, mitigate and manage fraud, or your bottom line will continue to suffer.”
Mark Button, Director of the Centre for Counter Fraud Studies at the, University of Portsmouth, adds: “This research shows that the most accurate measurement of fraud in organisations continues to show an upward trend. Many organisations are losing significant amounts to fraud and much more can be done to reduce losses.”
“Organisations could do much more to enhance prevention through a number of measures such as effective vetting of new staff, investing in data analytics and developing an anti-fraud culture.”
(Source: Crowe Clark Whitehill)
For spontaneous spenders, the word “budgeting” can cause alarm bells, with the thought of having money left over at the end of the month seeming unattainable. People often think budgeting means having to cut back on the things that they enjoy. Being money smart doesn’t have to mean you miss out.
It was recently reported that in their lifetime, a British person will spend on average £144,000 on impulse shopping. This can include anything from the chocolate bar that you grab as you get to the till and other small purchases which soon add up, to regularly splashing out on new clothes.
There’s nothing wrong with treating yourself every once in a while, who doesn’t deserve a little retail therapy. However, if this is happening a little too often and you’re in need of looking after the pounds, there are a number of changes you can make.
The experts at PIWoP, a price drop alert tool, know how important the value is of every pound that you save. They offer five ways that people can create healthier spending habits and become money savvy.
Are you more attracted to the sale or the item?
It can be tempting to pick up a product because the discount on it seems too good to miss, sometimes this appeals to consumers even more than the item itself. If this is the case, think about if you really need it, if it’s the money off label that’s caught your attention rather than the actual product, leave it on the shelf and save yourself money. That way, when you see something that you really want, even if it’s at full price, you’re more likely to have the extra money available to buy it.
Budget and prioritise
Some expenses come out every month, write down what these are and then work out what you have left over. Then factor in things which are bound to occur, such as meeting friends for dinner or needing new school shoes for the kids. Prioritise these additional outgoings, certain things will need budgeting for, a weekly takeaway pizza is unfortunately not one of them! Cutting out spending that isn’t a priority could leave you with considerably more money at the end of the month.
Why are you spending?
Treating yourself to a new outfit so you feel confident at an upcoming event or rewarding yourself after a lot of hard work is of course okay. However, if this happens on a regular basis and your bank account is suffering for it, it might be time to change your spending habits. Consider why you are spending and how productive it is. For example, if you spend when you are stressed or bored, there are other ways to blow off some steam that are considerably cheaper. Spending is often used as a short-term fix to feeling better, as soon as you remind yourself of this, you’ll be less tempted to overspend.
Do you need the item now?
Finding a product that you really like or can imagine yourself needing for your next holiday or when the house is redecorated can make it easy to buy it right away. However, think about if you really need the item right now. If you’re moving house next year, although those lamps or expensive armchair might get you feeling excited, it might be better to wait for any upcoming end of season sales. Technology is helping consumers to do this by taking price comparison services one step further, such as the PIWoP tool. It allows consumers who have the tool installed on their computer, tablet or phone and see an item they like, to use it to enter the price they want to pay for it and the tool then alerts them if that item does go to or more likely below their PIWoP (Price I Want to Pay). Even waiting until the next day can make you realise that you don’t really need it, or that your money could be better spent elsewhere.
Set goals
If you’re a real foodie who enjoys going out to eat, creating healthier spending habits doesn’t mean you have to stop doing what you enjoy. Or you might be interested in fashion and are eager to keep up with what’s new this season. Set yourself goals such as only eating at a restaurant one or two times a month (or however much you can afford without overspending) or allow yourself a couple of treats a month when it comes to clothes. Saving money while still allowing yourself a few luxuries will feel much more satisfying than regularly spending and then feeling stressed a few weeks after.
Last November, the Bank of England raised interest rates by 0.25% - the first increase for ten years. The Governor of the Bank of England, Mark Carney, warned that we could see two more increases over the next three years – but then in February of this year, the Bank’s policy committee warned that rates may actually need to rise “earlier” and by a “somewhat greater extent” than previously envisaged. Below Steve Noble, COO at Ultimate Finance, provides excellent insight into protecting against rate changes from hereon.
This will concern many SME owners. Research has shown that a quarter of SME entrepreneurs have funded the growth of their business through their own personal finances. The higher payments required when rates rise across mortgages, credit cards and other loans could put a squeeze on them at a time when conditions are already challenging. This is particularly true if high street banks tighten their lending to specific sectors, as happened during the last recession.
If this happens, good businesses could find themselves pressurised on both sides – putting jobs and entire organisations at risk.
My advice to small business owners and entrepreneurs worried about the prospect of almost certain rate rises is to assess the situation in a series of steps:
Work out what impact a rise of 0.25% or 0.5% would have on your repayment costs
Get your calculator out! Pool together all the finance products you have on variable rates and see how much a rate rise could add to your repayments. Many finance websites have handy calculators that will do this for you. The impact of a 0.25% increase may be small on one individual product, but if you have several it could add up.
Is this something that you can absorb, or will it put a strain on already stretched cash flow?
Think about what the likely increases mean for your business. If you are funding the company through your own finances, will rate rises create difficulties? If finances will be too tight following rate rises and banks reign in on lending, there’s no option but to look at the alternatives and rather than expecting the high street to come up with the answers.
Review your business costs and income
Are there are any unnecessary expenses you can cut out? Little business ‘luxuries’ you’ve been allowing that might need to go? On the income side, have you been undercharging for certain services or are you running ‘special offers’ that might need to end?
Fight back against late payments
Research by the FSB shows that late payment costs the UK economy £2.5bn every year and results in more than 50,000 business deaths. If rates rise as expected, black holes in your cash flow caused by late payments will have increasingly dire consequences. Have serious conversations with your partners and suppliers to lessen the problem, rather than accepting it as a usual part of running a business.
Explore the finance options
There are many forms of finance outside of traditional bank loans. For example, invoice finance that enables you to borrow funds against the value of invoices you have issued but not yet been paid for. Purchase finance that pays your suppliers for goods you buy from them. Asset finance for the purchase of business equipment. Or simply short-term loans to help you meet your needs.
Although banks will offer services of this type, the customer experience will be vastly different. Where high street banks will reject a business that doesn’t meet its pre-set criteria, other providers will offer a more flexible, tailored approach. A solution can be produced with payments terms that suit the business in question, rather than a set agreement which simply won’t work for many in need of financial support. As rate rises seem to be looming, now is the time to begin doing your homework.
SMEs are the growth engine of the UK economy and now more than ever its vital they are supported at every turn. Although rising interest rates will prove difficult for many, for those who plan for the future now, the road will become much less rocky.
If the UK leaves the EU in 2019 with no deal permitting access to the single market and customs union, it could cost the economy £237,823 every minute of every day in lost economic output by 2020.
It’s not just at home where the pinch will be felt, with the cost to the EU itself £189,307 every 60 seconds. Although this will be shouldered across all the remaining 27 nations.
While the economic picture continues to look bleak for the next two years and further into the future, the current position also makes for difficult reading when viewed as a 60-second economic snapshot.
As we currently stand, the gross Government debt is increasing by £129,566 every minute. However, even the government’s spending commitments look relatively small next to the UK pension deficit, which grows by an eye watering £922,849 every 60 seconds.
It’s not just the Government itself that’s feeling the squeeze. Specifically, every minute the NHS spends £229,284. As the NHS is gripped by another winter crisis, the scale of the financial challenge that needs to be met can be seen starkly when figures are looked at minute by minute.
Most notably, to meet requirements in 2020, the Government will need to pump an extra £57,234 of funds into the NHS every minute of every day just to keep it going. A much higher figure than the additional £7,991 every 60 seconds promised during the Brexit referendum.
Every minute, the UK Government also spends £78,006 on Education, £17,503 on the Police and £66,780 on Defence.
As the government and public services try to make ends meet, the financial situation of many families is also getting harder. The combined expenditure of UK households on food is £152,706 per minute, whilst UK households spend £194,916 collectively per minute on energy and fuel.
Food bill increases come at time when many families are already struggling with significant debts. Per minute across the UK £94,910 is spent repaying personal debts. The need to purchase big ticket items is also driving up financial commitments for families with £60,312 of consumer car credit issued every 60 seconds and mortgage debt increasing by £47,716 each minute.
Amanda Gillam from Solution Loans, the company that compiled the research, said: “When we hear about the economy in the news, sometimes it’s extremely difficult to understand the context and how it actually impacts ordinary people.
“We wanted to break it down into a simple format and look at how much we’ll potentially lose from Brexit, as well as the current position for the Government and ordinary people. The data clearly illustrates the vast sums people and families are spending on essentials such as food, clothing, energy and health and the levels of debt we’re all facing.”
While the average UK household brings in just 5p every minute, a CEO of a FTSE 100 company would earn 170 times more at £8.50. In that same period UK MPs claim £216 in expenses and £91,324 is laundered across the UK.
The annual cost of fraud in the UK is £190 billion, equal to around £10,000 per family, according to a new research study.
The Annual Fraud Indicator 2017 reveals the staggering prevalence of fraud, which is now the UK’s most common criminal offence.
Put into context, the scale of the problem is such that the cost of fraud to the UK is greater than the Gross Domestic product of 148 out of 191 countries.
The study, compiled by Crowe Clark Whitehill, Experian and the Centre for Counter Fraud Studies at the University of Portsmouth shows that private sector fraud costs the UK economy £140 billion, while fraud in the public sector is estimated to cost the country £40.4 billion in 2017.
Fraudulent activity aimed at individuals amounts to £6.8 billion, while charities suffer to the tune of £2.3 billion.
These numbers are far from insignificant. With the latest National Audit Office and National Crime Agency statistics confirming that fraud has surged to the top of the list of commonly committed crimes, now is the time to identify and measure its cost so that businesses, government bodies, charities and individuals can understand the value of their investment in countering fraud.
The private sector is the worst hit, largely due to the volume of expenditure conducted by private enterprises. While public sector fraud is the easiest to measure and detect due to the reliability of tax and benefits data.
A significant proportion of the costs of fraud in the report are attributed to procurement fraud. Procurement accounts for a large portion of organisational expenditure and fraud can creep in at various stages of the procurement process. The rise in the incidence of fraud in registered charities is largely attributable to an increased expenditure on procurement, for example.
New trends have emerged that impact demography and type of fraud victim. Technology continues to open up new avenues for fraudulent activity. Online Banking fraud has grown by 226% and Telephone Banking Fraud by 178% in the past year, with many millennials increasingly being drawn into the fraudsters’ net.
Technology and legislative controls are also impacting behavioural patterns amongst fraudsters. Reformative measures such as the Payment Services Directive 2 (PSD2) will bring tighter regulatory controls and deter attacks, while new counter fraud tools are causing fraudsters to innovate and target platforms not governed by strong customer authentication.
Jim Gee, Head of Forensics and Counter Fraud at Crowe Clark Whitehill, comments: “The cost of fraud is clear – not just the proportion which is detected, nor a guestimate but accurate information about the total cost to UK plc, just like any other business cost. And that cost is £190 billion.
“Private companies are made less stable and financially healthy; as citizens we don’t get the quality of public services that we pay our taxes to receive; and even charities don’t get to spend the full value of the donations which people make. What other problem of this size doesn’t have a proper national response?”
Nick Mothershaw, Director of Fraud and Identity Solutions at Experian: “Awareness of the dangers fraud poses is growing, but the total of £190 billion is startlingly high. Plastic card and online banking fraud continues to increase, so new regulations which make it harder for fraudsters to use someone’s cards online are a necessary step. Fraudsters are shamelessly opportunistic and are now turning their attention to the pensions release, lured by the promise of high value returns when their scams are successful.”
Professor Mark Button, Director of the University of Portsmouth’s Centre for Counter Fraud Studies, adds: “The 2017 Annual Fraud Indicator highlights again the colossal cost of fraud to the UK economy. At £190 billion it would represent more than the UK government spends on health and defence combined, or on all welfare payments, bar pensions.”
(Source: Crowe Clark Whitehill)
LCD wide screen TV at 50% off? Don’t mind if I do. Except I’ll have to make my way through a throng of a thousand punters, get punched in my left eye half a dozen times, and likely trample a few elderly buyers on the way. Black Friday is year on year becoming more about the thrill than the financial savings. Masses of people line up for the best stores to open, and scramble in once the doors open, only to leave the weak behind.
According to official data collected this year by Quantcast, in the US alone in 2014, 23% of 133,700,000 Black Friday shoppers camped outside a store the night before, and in 2015, all in all the nation spent around $67,560,000,000 in store and $2,932,000,000 online, with an average accumulated spend of $403.35 per person. These stats go to prove why Black Friday is crucial for the economy, as around 30% of annual retail sales occur between this celebrated shopping spree and Christmas itself. This in turn means more staff are hired in the busy period; according to NRF statistics, between an estimated 640,000 and 690,000 workers in 2016.
As many take part in Black Friday’s magic race for deals, most are either behind the cashier’s desk, managing teams, counting the numbers, or on the other side of the retail coin, making the most of prices. To shed light of the kind of situations, violence and anarchy you can expect from Black Friday this year, taking place on the 24th November, Finance Monthly has put together 10 popular videos displaying the worst moments that have taken place on Black Friday over the past decade. Some of these may completely put you off the idea of taking part in this public event, while some will prepare you for what’s to come, if you’re still daring to make the most of it.
10. Black Friday Threats
Screaming profanities and ‘squaring up’ to one another, these two shoppers are consumed by the Black Friday fury as Asda’s security staff and various members of the public keep the two from ripping each other to shreds. The passion for justice is palpable as they stare at each other with shopper’s rage. “I’ll be outside mate!”
9. Black Friday Shopper Horde
Here we see hundreds of shopping mall dwellers longing for the shop’s shutters to rise, so they can engage in the Black Friday rush they’ve been waiting for all morning. As the shutters reach but an inch off the ground, fingers curl round the bottom, some people squirm under the rail, and heads start popping through the bottom. Before you can say Black Friday, the horde of shoppers are through the gap below the shutters and racing for a find. The shutters aren’t even half way up yet, but the rules are there to be broken, right?
8. Black Friday Staff Barricade
Just over eight members of staff form a barricade dam of stopping power as they proceed to open shop on this fine Black Friday morning in 2016. As the shutters are half a meter up the doors, look who comes crawling in, their first customer of the day, along with a whole other mass of shoppers ready to dig their claws in the best bargains. As the staff themselves are pushed out of the way, and fail in their mission to barricade until open, members of the public are infiltrating their way through the employees’ legs and getting on with their hunt. The staff are clearly scared and try to shut it back down, having to stomp it to the ground. One guy quite reasonably just lifts his hands in the air and says nah forget it, not today.
Hit the Next button to see our top 7 Black Friday scraps!
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Sustained economic growth and the fall in the Sterling exchange rate have put record pressure on British businesses to increase the amount of money tied up in working capital, leaving them at risk if growth were to weaken in the months ahead, according to the latest report from Lloyds Bank Commercial Banking.
Firms across Britain now have around £535bn tied up in excess working capital – up seven per cent from £498bn since the last report was released in May – meaning that firms could struggle to free up cash either to grow or to weather turbulent financial conditions.
The sustained growth seen in the past 12 months – particularly in manufacturing and in the services sector – has increased the amount of cash tied up in the day-to-day running of businesses, with the impacts from the fall in Sterling, forward purchasing of inventory and a rise in input costs, being fully realised.
At the same time, one in four businesses said their customers had taken longer to pay during the past 12 months, increasing the value of firms’ outstanding invoices. This comes as businesses are continuing to rapidly build up inventory, leading to more cash being locked up in stock, which is then unable to be used for growth.
With as many as one in three firms saying they are concerned by economic uncertainty or a fall in sales during the next 12 months, these factors could spell trouble for British businesses if economic conditions declined.
Adrian Walker, managing director, head of Global Transaction Banking at Lloyds Bank, said: “Increasing pressure for British businesses to hold more working capital has to date largely been driven by economic growth fuelled by the fall in Sterling. But, if there were any economic obstacles on the horizon this could be a double-edged sword.
“By locking up cash in this way, it stops investment in other more productive areas of the business, whether that be investing in new people, creating new products or targeting new markets.
“With as many as one in three businesses telling us that their greatest concerns for the next 12 months are economic uncertainty or a fall in sales, this reliance on future growth prospects is concerning.”
The findings come from Lloyds Bank’s second Working Capital Index, a six-monthly report that uses Lloyds Bank Regional Purchasing Managers’ Index (PMI) data to calculate the pressure British businesses are under to either increase or decrease working capital.
Working capital is the amount of money that a company ties up in the day-to-day costs of doing business. Growing businesses tend to use more working capital, while pressure falls when firms realise they are facing challenges.
The current Index reading of 108.0 is an increase of almost four points, from 104.1 at the end of 2016, and is just below the highest point seen since the research started in 2000.
The Index highlights that with the UK’s domestic outlook looking weaker, businesses are increasingly going to need to rely on exports for future growth.
While the current relative weakness of Sterling makes conditions for international trade benign, the practicalities of exporting mean that it often places even greater stress on working capital through shipping times and slower payments.
Mr Walker added: “Whether businesses expect to grow through exporting, or they anticipate challenges due to weakening domestic demand, UK firms could benefit from the operational efficiency and cash flow boost that comes from working capital improvements.
“In the past, previous highs in this Index have coincided with improving financial conditions. The fact that the Index is currently climbing while financial conditions remain relatively low means businesses are taking on more and more risk.
“Our experience is that businesses that undertake a programme of working capital improvements can typically release around three to five per cent of turnover in additional cash, allowing them much more freedom to invest in growth, trade internationally, expand their product set or to give themselves a buffer to see them through more troubling times.
“But doing so successfully isn’t easy. It requires change across a number of business functions, and so the time to undertake that work should be done ahead of embarking on further growth, a new exports programme, or before any possible future storm hits.”
Manufacturing under pressure
The manufacturing sector has been a source of hope and opportunity for the British economy in recent months as the fall in Sterling made British manufactured goods more competitive overseas.
But the sector’s growth, together with rising import costs and pre-purchasing of materials in expectation of inflation, has pushed the sector’s working capital index to 126.1, which could be hampering growth amongst manufacturing businesses.
This compares with readings of just 105.0 and 104.8 in the services and construction sectors respectively.
Regional variations
The pressure to increase working capital grew in every region apart from the East of England, where the Index fell from 112.0 to 107.8. Although, the East of England still saw high pressure on businesses to hold more working capital.
Scotland, where a reading of 99.5 indicated pressure to reduce working capital six months ago, saw the biggest increase, with the Index reading rising more than five points to 105.2.
Wales remained the region with the highest pressure to increase working capital with the Index climbing from 113.7 in April to 114.3 now.
(Source: Working Capital)
As you may already know, MiFID II is just around the corner and some firms are already well on their way to compliance, however others remain either oblivious, unprepared or facing the many challenges in establishing steps towards compliance. Here Fabrice Bouland, CEO of Alphametry, explains for Finance Monthly what some of these challenges may be and what lies ahead for firms, in particular dealing with the different approaches regulators are taking in respect to the implementation of investment research unbundling.
On 3rd January 2018, new EU legislation comes into practice, part of which stipulates that investment research will have to be paid for separately. This marks an end to the historic model whereby much of it has appeared to be provided free of charge, or at least bundled in with other costs such as trading commission. Firms are now in a scrabble to the finish line as they put new processes in place and make decisions about how research will be sourced and paid for. Few, if any, are fully MiFID II-compliant and ready for January’s deadline. Yet as the clock ticks down, and daily stories emerge from buy and sell-side firms announcing their research pricing and budgeting plans, one fundamental question is often overlooked – how are asset managers and analysts determining the value of their research to ensure maximum value is generated from whatever approach they have decided upon.
Many asset managers have said they will be footing the bill for external research out of their own pockets. Most recently, BlackRock has joined the growing queue of firms which have decided to take this approach. Its announcement was quickly followed by a number of firms, including Schroders, Janus Henderson Investors, Union Investment and Invesco, backtracking on earlier decisions to pass research costs on to investors – all have now said they will be absorbing the costs themselves. Of course, bearing the cost internally will be much harder for smaller and mid-tier firms, many of which will have to reduce the volume and breadth of external research they have access too.
When it comes to pricing, we’ve seen some eye-wateringly high figures. Barclays outlined a system of tiered packages, starting at £30,000 for a ‘read only’ subscription to European research, rising to £350,000 for its ‘Gold’ package. The larger investment banks will, of course, charge more than their smaller rivals. Canaccord Genuity Group’s sell side unit in the UK released a figure of £75,000 a year for full access to the firm’s investment research and analysts, including dedicated sales and analyst calls and customised research requests. Similarly Alliance Bernstein LP’s is quoting firms around $150,000 a year for access to equity analyst reports and other services.
So what’s missing in this brief overview of the market and regulatory landscape? Better evaluation of research must undoubtedly play a role in how firms consume research in an unbundled world, especially for smaller managers with reduced budgets. Technology has a key role to play in accurately assessing and pricing investment research, as well as demonstrating full transparency in order to meet regulatory requirements. In many ways, this is a market crying out for innovation given that only 1% of research notes sent out are read by the buy-side, according to Quinlan & Associates.
In a digital, data-reliant world, traditional voting systems for research are slow and inaccurate. Evaluation must be bottom-up and data driven if firms are going to establish where reduced budgets need to be focused, and which providers deliver the best ROI. New research platform generation provide an opportunity for managers to better understand what they consume, as well as helping providers hone in on providing the most valuable and relevant content. There now exists a huge opportunity for asset managers to integrate innovative knowledge management solutions so that research can be targeted directly into the heart of firms’ investment process, giving them the best data from global sources, as well as supporting budgeting and payment decisions in a more detailed way
Clearly, there remains a lot to do over the next four months, and into 2018, to ensure firms are ready and compliant with MiFID II. The price discovery process continues to be very painful, not to mention the challenges asset managers face deciphering the varying nuances and interpretations of the legislation by different regulators, and how MiFID II will work globally.
Following this week’s news on a two year high for the Brent crude oil, Richard King, Trading Manager for Inprova Energy, discusses the current impact of oil price volatility on company energy bills worldwide.
Brent crude oil prices hit a two-year high of more than $58 a barrel on Monday 25 September. Although prices have since reduced slightly, analysts don't expect prices to fall back.
Outlook for oil prices
Oil price increases have been largely driven by cutbacks in supply from the oil exporting cartel OPEC. Market experts predict that OPEC will continue its deal to cut production beyond March 2018 as part of its strategy to rebalance oversupply in the global oil market. Market analysts expect the oil price to be within the range of $55 to $60 a barrel for the remainder of the year, with potential for higher levels in 2018.
In a further boost to recovering oil prices, US producers are struggling to fill the supply gap, and the independence referendum in Kurdistan has the potential to disrupt Middle East oil supplies due to the Iraqi government's call to boycott Kurdish supplies. Mounting political tensions between North Korea and the USA could also be a bullish force.
Impact on energy prices
This is having a knock-on effect on UK business energy market prices. Both gas and electricity contracts for delivery in the next few months have posted significant gains of 2-3%. This has reversed recent decreases in energy prices, linked to the currency improvements for Sterling against both the US dollar and the Euro.
Energy market volatility
Oil prices are firmly linked to wholesale energy prices, which will, undoubtedly, increase energy market volatility in future months. In addition, as we head into winter and uncertain weather conditions, and continue to face energy supply reliability problems from continental Europe, further price swings are inevitable.
Such volatility is becoming the new norm. During the past 12 months there was a 45% price swing in the wholesale power market, which was more than twice as volatile as the average movement of the five years prior.
Smarter energy purchasing
While overall electricity and gas commodity prices remain well below the levels reached in 2014, the sizeable commodity price movements underline the imperative of getting timing right when purchasing energy.
Flexible procurement strategies can be less risky than fixed purchasing because there is the facility to buy energy little and often when wholesale prices are favourable, rather than gambling that the prices are best on the day that you fix your purchase. There is also the facility to take advantage of forward prices, which are currently very attractive beyond 2018.
Above all, it is imperative for energy buyers to manage their energy purchasing within a robust risk management strategy, which will set price limits and guard against buying at the top of the market - helping to counter market uncertainty.
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