Struggling businesses could be "pushed over the edge"
Struggling businesses could be ‘pushed over the edge’
Those are the findings of a survey of 500 companies carried out by the insolvency trade body R3.
R3’s Business Distress Index, which covers the last quarter of last year, found that the number of businesses reporting decreased profits rose to 54% - an increase of 5% compared with the previous quarter.
The index also revealed a 4% increase in the number of firms making redundancies, and a 3% increase in those introducing pay cuts or freezes. One in six businesses are finding it difficult to pay invoices on time.
R3 President Steven Law said: “The overall picture indicates that conditions have got more challenging from September to December last year – though we must remember that during this period businesses were affected by the adverse weather conditions.
“However, the increase in businesses struggling to pay bills on time is worrying as this is the technical definition of insolvency.
“This coupled with an increase in the number of businesses using the maximum overdraft facility, which stands at 1 in 5, suggests that many businesses are running on empty.
“For many, an increase in interest rates could push them over the edge. Seeking professional advice early could help these businesses to avoid insolvency.”
The figures emphasise the need for businesses to take action to recover unpaid debts as soon as problems arise. Delay could see debtors going out of business before they pay your invoice.
Once the insolvency process begins, creditors may find it difficult to recover all or even a small percentage of their money.
Please contact us if you would like more information about credit control and debt collection.