One in three firms facing heightened insolvency risk

16-10-2017

More East of England businesses are at increase risk of insolvency than at any point this year.

So says restructuring and insolvency trade body R3, which has been looking at the risk levels in a multitude of sectors and says that each one is showing an increase.

R3’s September statistics, compiled using Bureau Van Dijk’s Fame database, highlight that almost one-in-three businesses in the region – 30.3 per cent – are now in the elevated insolvency risk band, which is equivalent to around 102,000 companies. This is an increase of 3.2 per cent on last month’s figure and is almost six percentage points higher than the proportion in this category at the start of the year.

Of the key Eastern business sectors monitored by R3 - which include manufacturing, retail, construction, agriculture, professional services, pubs, hotels and restaurants – technology and IT is the sector with the highest elevated insolvency risk. Over one-in-three of its businesses – 37.7 per cent – carries an above average possibility of insolvency.

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On a more positive note, the East of England agriculture sector is proving to be more financially stable than any of its UK regional counterparts. Despite its insolvency risk increasing by 4.5 per cent compared to last month’s figure, the sector has fewer businesses at risk of financial failure than any of its nationwide peers. Less than one-in-five, or 18.7 per cent, falls into the negative risk band.

R3 Eastern Chairman Mark Upton, a partner at Ensors Chartered Accountants in Cambridge, said: “The last quarter of 2017 will be an important test for East of England 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’s 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: http://www.cambridge-news.co.uk/business/business-news/one-three-firms-facing-heightened-13679785