Surge in number of firms facing critical difficulties
There’s been a large increase in the number of firms facing critical difficulties, according to new research.
The Red Flag Report produced by Begbies Traynor shows that 186,554 UK businesses were experiencing significant or critical financial problems in the first quarter of this year.
That was a 15% increase on the same period in 2010.
Sectors that are dependent on discretionary spending were the worst affected. Taken year on year, the number of businesses showing signs of distress in the Bar and Restaurant sector rose by 68%.
The increase was 60% in the Leisure and Culture sector and 23% in the Sports and Recreation sector.
Professional Services firms have also been badly hit with a 61% increase in the number facing significant or critical problems.
The research also shows that more firms are taking a tougher line to ensure invoices are paid. A spokesman for Begbies Traynor said: “High levels of legal actions taken against debtors indicate that creditors are attempting to maximise cash collection right across their customer base.
“The hike in oil prices and January’s VAT increase has made cash flow and credit control essential priorities for most businesses with some seeking payments through the courts.”
With cash flow problems at crisis point for many firms, it is not surprising that they are taking legal action to ensure payment and protect their futures.
Many find that a letter from a solicitor is often enough to secure payment. For more entrenched debtors there are several other legal options to take, up to and including court action.
Please contact us if you would like more information about credit control and debt collection.