New research that shows business distress is at a record low
Members of the UK200Group of independent accountancy and law firms have today commented on research that shows a record low in business in distress.
The new research by insolvency trade body R3 has revealed that the just 17% of businesses reported a key indicator of distress in December; a record low.
The findings indicate a significant decline in the level of distress from the group’s last survey in September 2015 (28%) and replace the previous record low of 24% in April 2015.
In comparison, when the survey began in March 2012, around 64% of businesses reported indicators of distress.
Duncan Montgomery, tax partner at UK200Group member firm Whittingham Riddell, said:
“R3’s research (500 phone calls) showed that while there are more positive noises form big business, SMEs particularly at the micro end were showing less signs of growth.
“What we are frequently seeing in the SME sector is businesses that have grown, but are coming up against the limits of some of their historic systems, these need a refresh to streamline activity for new levels of volume.
“Businesses can get stuck and plateau unless they automate more processes and allow management to manage with information not produce it and manually drill down. Sales managers need to be managing the team and selling not drilling in to data themselves.”
Jonathan Russell, partner at UK200Group member firm ReesRussell, said:
“It is pleasing to see reports that show fewer businesses in distress and certainly the last ten years of lack of finance for small businesses has made them either pack up or become more resilient.
“The worry is that whilst I see fewer micro businesses with money worries, the picture is not as good with the larger small businesses that are more reliant upon National and International trade and dealing with the major companies and organisations.
“Here the squeeze on margins has meant more of the mid-sized businesses are in a less comfortable position. Whilst I am sure it is true the percentage of businesses in financial dilemmas may be down, I suspect those that are in distress are larger businesses.”
