By Harry Mottram: The BBC’s Simon Jack has given an alarming report of business collapse following warnings from the insolvency practitioners Begbie Traynor.
He said that the company had received a growing number of calls from business owners who were considering calling it a day as costs mounted and interest rates crippled their ability to repay covid loans. Simon Jack wrote: “Begbies Traynor said the number of companies in critical financial distress jumped by 36% in the last three months of 2022. A firm is in critical financial distress if it has more than £5,000 in county court judgments or a winding up petition against it. The number of county court judgments served against companies in the same period jumped by 52% compared with 2021.”
He quoted Paul Jones who has a company in Manchester and was struggling with high costs, historic debt, low consumer confidence and post-Brexit trading problems. He said Mr Jones had thought about shutting up shop every month for more than two years a that ‘he remains downbeat about business prospects in 2023.’
Another case Simon Jack gave was of the Creameries Restaurant in Manchester which had closed down after the ‘final straw’ of the hike in energy costs. Run by Chef Mary-Ellen McTague the business shut last year despite having rave reviews and was trading well – until the pandemic came along. Many in business will relate to her story that the concerns about making a venture work took a toll on her mental health – and the drain it puts on the owner as the money matters mount.
Simon Jack said Begbies Traynor had reported that the number of firms on the brink of going bust jumped by more than a third at the end of last year. Ian Carrotte of ICSM whose group is dedicated to preventing bad debt and late payment said the Government support for businesses over energy prices is due to end in April. He said: “Sadly it is a perfect storm for many business sectors with interest rates, inflation, energy prices and a fall off in footfall as household incomes decline. It is no surprise to those of us of a certain age there are a rash of strikes taking place in all sectors. Inflation is back to 1970s’ levels – and we all know what happened back then. Our advice is to cut overheads to the bone but don’t give up on marketing and sales. But above all do not allow clients to pay later than your credit terms. Cash flow is just as important as when there is a boom.”
For information on ICSM visit www.icsmcredit.com or call 0844 854 1850.
ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.com. Ian.firstname.lastname@example.org