All West Midlands businesses now at greater risk of insolvency according to R3 Midlands research

11-10-2017

More West Midlands businesses are at greater than normal risk of insolvency than at any point this year, with every regional sector monitored by restructuring and insolvency trade body R3 now showing an increase.

September statistics, compiled using Bureau Van Dijk’s Fame database, highlight that over one-in-four businesses in the region – 27.7 per cent – are now in the elevated insolvency risk band, which is equivalent to over 76,000 companies. This is an increase of 2.7 per cent on last month’s figure and is over four percentage points higher than the proportion in this category at the start of the year.

Of the key West Midlands business sectors monitored by R3 - which include manufacturing, retail, construction, agriculture, professional services, pubs, hotels and restaurants - transport and haulage is the sector with the highest elevated insolvency risk.

Over one-in-three of its businesses - 36.4 per cent – carries an above average possibility of insolvency. The sector is also one of the highest regional risk sectors nationally, surpassed only by the East Midlands and Yorkshire.

On a more positive note, the West Midlands manufacturing sector is proving to be more financially stable than any of its mainland British regional counterparts. Despite its insolvency risk increasing by 4.7 per cent compared to last month’s figure, the sector has a smaller proportion of businesses at risk of financial failure than its nationwide peers. Only one-in-five, or 20.4 per cent, falls into the negative risk band.

R3 Midlands chairman Chris Radford, a partner at law firm Gateley in Birmingham, said: “The last quarter of 2017 will be an important test for West Midlands businesses. Many larger firms have been protected from the pound’s recent falls by currency hedges or long-term fixed-price contracts, but these are now unwinding or have since unwound.

"Businesses of all sizes have also been buoyed by resilient consumer spending in recent months, but much of this is on the back of increased borrowing.

“Going forward, it is imperative for business owners to monitor their finances carefully and plan for all eventualities. At the first sign of significant cash flow difficulties, it is important to take relevant professional advice.

"When R3’s members are called in to help early enough, there’s a lot that can be done to rescue and support businesses beyond traditional insolvency solutions.”

Source: https://www.expressandstar.com/news/business/2017/09/28/all-west-midlands-businesses-now-at-greater-risk-of-insolvency-according-to-r3-midlands-research/