Azets responds to the July 2024 company insolvency statistics

Chris Tate, partner at Azets, at UK top 10 accountancy and advisory firm Azets, comments on the July 2024 company insolvency statistics for England and Wales:

“Company insolvencies in England and Wales were 2,191 in July 2024. This represents a decrease of 7% over June but the figures are remaining stubbornly high – 16% above that for July 2023.

“Despite recent encouraging signs, a great many businesses are still being pushed into insolvency while the challenges faced by many others are often proving to be almost insurmountable.

“The August interest rate reduction from 5.25% to 5%, being the first in over four years, was welcomed by business but will not be enough to significantly aid those businesses who are highly leveraged.

“The traditional summer slowdown, added to ongoing economic challenges – extra costs, supply chain issues, pay increases, cautious customer spending – may be a decisive factor for many companies.

“Typically, poor cashflow management is the biggest killer and many businesses are simply not forecasting future cashflow or acting quickly enough at the first signs of distress.

“Therefore, business leaders and directors must be alert to the signs that their business could be in trouble and must have that difficult conversation immediately, rather than when worries have spiralled. The earlier action is taken, the more options will be available,

“Business owners should avoid throwing good money after bad during downturns until they have sought specialist advice and considered all of their options, including potential restructuring and insolvency.

“Anecdotally, the businesses we are speaking to most are those which provide a discretionary spend service, indicating cautious business and consumer spending endures following the recent cost of living crisis.”