Signs of Financial Distress on the Rise Among UK Companies
Written by: Keith Tully
Date: Wednesday 25th October, 2017
A growing number of British companies are showing signs of being in financial distress, according to a new set of figures on the subject.
The insolvency trade body R3 has been keeping track of key indicators of financial difficulty among UK companies and discovered some potential causes for concern.
In April of this year, one in five businesses exhibited one or more sign of financial distress but by September that proportion had increased to one in four.
Signs taken by R3 as being an indication of potential distress among businesses include a decrease in revenue levels and an increased reliance on overdraft facilities.
A variety of factors are understood to have contributed towards creating a situation in which more and more companies are struggling to make positive financial progress, with rising costs and inflationary pressures prominent among them.
Higher fuel costs, the fall in the value of the pound against other currencies and pressure to increase wages are all believed to have contributed to the problems that many companies have been facing in recent months.
Rises in business rates have also been a serious cause for financial concern for thousands of businesses over the course of this year.
“The economy’s growth has not been rapid enough to offset these greater outlays, leaving some firms in a precarious position,” said Adrian Hyde, R3 president.
“There’s been a very firm increase in distress levels over that last 18 months, alongside a drop in growth,” he said.
“Businesses have moved on from record high growth levels and it looks like a new phase of the economic cycle has started.”
A major issue for many thousands of UK companies at present is the relative lack of clarity on the likely impact of Britain’s departure for the European Union.
Adrian Hyde from R3 has described the current economic situation as becoming “murkier” in recent months with the terms of a post-Brexit relationship between the UK and EU countries still be negotiated.
The Institute of Chartered Accountants in England and Wales (ICAEW) said recently that it expects the Brexit process to have the effect of increasing insolvency rates among UK companies in the coming months.
Author
Keith Tully
Partner
Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.
If You've Enjoyed This Article or Found it Interesting, 'Please Share it' With the Rest of the World!
News
Which retailers have been hit hardest in the last five years?
5th April 2018 Real Business Rescue recalls some iconic high street names which have unfortunately deserted us in recent years. How many can you remember? And who might be next?
Owner of Bargain Booze on the Brink of Administration
29th March 2018 The group which owns Bargain Booze is on the brink of entering administration after failing to raise the emergency funds required to resolve a severe cash flow crisis.
Government outlines plans to crackdown on directors behaving badly
29th March 2018 The government has outlined a series of proposals that it hopes will help to tighten up rules around corporate governance in insolvency scenarios throughout the UK.
West Ham United Co-owner ‘Used Club to Avoid Paying £700,000 in Taxes’
28th March 2018 David Sullivan, the co-owner of West Ham United, has been adjudged at a tribunal to have used the football club to avoid paying £700,000 in taxes. The matter relates to a £2 million transfer of funds
Carpetright Looking to Close Stores as Bosses Consider CVA Rescue Plan
22nd March 2018 Carpetright is looking to close some of its most unprofitable stores as it considers entering a company voluntary arrangement (CVA) rescue deal to avoid becoming the next British high street retailer
Every day we help companies just like yours turn things around against seemingly impossible odds, regardless of your situation we can help. Find your nearest office today.
