They’re designed to alert policy makers to small or big changes that occur as close to the time as possible.
Some are informational - like how much petrol you have - but some also alert to bigger changes that if left unchecked could have negative consequences - like the oil light coming on.
In the case of the economy, one indicator is taking place this week - rent day.
Traditionally this is one of the four days a year - one in each quarter - when businesses and retailers pay three months rent to their landlord.
It’s generally done quarterly and three monthly for traditional reasons but under normal circumstances can help businesses with their planning and budgeting. If they pay their quarterly amount in advance, they can concentrate on making profits rather than worrying about raising enough to make the rent at the end of the month or week.
Some stores have already shifted to monthly rental payments as they are unsure of their long term viability and others still have agreed or negotiated to move to a turnover-based system where they will pay a proportion of the money they make rather than a set amount.
We hardly need to remind you that 2020 is anything but normal circumstances so rent day takes on additional significance both as a general indicator of economic health and as a financial necessity for the landlords themselves.
The British Property Federation, which represents commercial landlords, estimates that as much as £4.5 billion in due rent will be unpaid from mid-March until the end of the year as a result of the Covid-19 crisis.
On the last rent day back in June, only 18% of owed rent was paid on time to landlords although this later rose to 70% by the end of August.
UPDATE - The first preliminary figures are in and they don’t look great. According to Retail Week, only 12.7% of owed rent was collected by increasingly furious landlords who are now contemplating what measures they have available to them.
Melanie Leech of the British Property Federation said: “Rising debt is too high a mountain for businesses and property owners to climb on their own.”
The BPF are arguing for more support for businesses who cannot pay their rent. They say that the government should provide support through a “bounce-back grant” that covers half the rent while landlords and tenants agree on how to make up the other half.
Of course there are other methods of dealing with forthcoming rent deadlines including the controversial but growing method of not paying.
Earlier this year we covered an increasing number of reports that retailers including big high street names such as Burger King, JD Sports, Primark, B and Q and TopShop had taken the controversial step of withholding all payments from their stores until landlords accepted lesser amounts or switched to a more equitable system as they saw it.
As the Coronavirus pandemic shows no sign of abating, neither does the economic equivalent with other businesses taking their lead and deciding to use the leverage of the circumstances to rewrite the rules for their own benefit.
Boots are the latest big name that are reported to have withheld the rent in their 2,400 UK stores.
They said: “We’re continuing discussions with some of our larger commercial landlords on options for rental and service charge payments in light of the Covid-19 pandemic.
“We stayed open throughout the pandemic to provide a pharmacy for the patients who needed us but retail footfall across our estate significantly reduced and trading has been severely impacted” they added in an official statement.
Under current legislation and circumstances there is very little a commercial landlord can do.
A moratorium on company evictions for non-payment of rents was introduced in April and recently extended until the end of the year.
Some businesses such as New Look and Poundstretcher have secured rent reductions as part of CVA processes agreed with their creditors and while other such as Ann Summers are using the threat of a CVA to persuade landlords to lower rents preemptively, well-capitalised and secure tenants such as Boots won’t have this option available to them.
Trying to keep up to date with the various rules, guidance and obligations that are changing can be like trying to follow a game of 3D Chess. Confusing, disorientating and your opponent is literally one or more steps ahead.
If you’re a landlord that’s worried that your previously secure portfolio is falling apart around you or an otherwise profitable business that’s struggling to meet obligations you could have paid from petty cash - don’t panic.
Get in touch with us to arrange a convenient virtual free initial consultation with one of our expert advisors.
As well as being able to lend an expert ear, we can tell you about rule changes you might not know about that could be to your advantage.
Bills and rent days will always come due but your window of opportunity won’t be - the quicker you act the more options and maneuverability you have.
Don’t waste it.
Centuries old practices will fall by the wayside, to be replaced by new structures and codes that have only come of age in the past few weeks - Zoom meetings anybody?
Received wisdom will be reexamined and while some customs and rules will remain, others will be looked back on with a mixture of amusement and bewilderment that they were followed for so long.
We doubted that paying rent would be one of these however, but these are strange days.
Firstly, we covered how some retailers such as Boots and Matalan have taken issues into their own hands and refused to pay rent for this Q2 2020 which came due earlier this month.
The landlords of Boots in particular are particularly aggrieved as the store is classified as an essential business so remains open and generating some income and sales during this period.
One of the landlords said: “We’re trying to support the little guy, the small independent traders whose sole income is through the cash register. I said to Boots - my ability to help those people is directly related to the people who could and should pay rent, paying that rent.”
Then there were reports that other retailers beginning with the Edinburgh Woollen Mill chain of retailers are including pandemic clauses into any new leases it’s due to sign with landlords of Bonmarche stores that their owner, Philip Day, brought out of administration last year.
The clauses would mean that EWM could agree on new Bonmarche store leases without having to pay any rents upfront until the lockdown is lifted and non-essential stores can reopen for business.
This also means that the company will be refunded any rent payments by their landlords should another pandemic hit in the future.
It seems that the authorities have been paying attention because the government has now banned landlords from using the threat of statutory demands and winding-up orders to claim any unpaid rent due to the crisis.
Commercial tenants also have the option to delay full rent payments unless they are already three months in arrears.
Section 82 of the Coronavirus Act 2020 already prohibits the forfeiture of commercial leases until 30 June 2020 (or longer if the government deems necessary) specifically for non-payment of rent.
As written, the law didn’t prevent other actions including recognised debt recovery devices until the new measures were introduced.
While some businesses have no revenue coming in, the government hoped that landlords would have some forbearance and look to cooperate with their otherwise profitable tenants.
The reality is that some landlords decided to take strong measures first because they were also struggling for income from tenants, some of whom aren’t reciprocating openly themselves.
A new business world is coming.
It might be weeks or months away but it will arrive and bring a host of changes with it.
Rent boycotts, debt recovery bans and niche rental clauses may be the first outliers of an evolving environment but they certainly won’t be the last.
You need to start thinking about how your business is going to adapt to a new environment when it becomes time to open up permanently again.
Where will you have a strong advantage? Where will you be in danger of being outflanked and left vulnerable? What part of your company will need evolution and which revolution?
Get in touch with us today to schedule a conversation around these topics and more.
We’re used to asking questions that need more than a yes or no answer and make you really think about what you and your business will need going ahead so you can re-emerge with all systems go.