Insolvency Update 1 February 2011
Recent statistics show that there were less than 16,000 formal corporate insolvency procedures across the UK in 2010 compared to almost 20,000 in 2009 (which represented a 16 year high), with only 3,605 companies becoming insolvent in the final quarter of 2010 representing a 19% fall on the same period in 2009.
Despite this improvement, it is unlikely that we have seen the worst of the difficulties. Public Sector cuts, increasing taxation and potential interest rate rises, in conjunction with lack of liquidity in the system indicate difficult times are still ahead.
Indeed, the Scottish statistics indicate that more companies became insolvent last year (1,100) than in 2009 (883), although the final quarter showed an improving position with corporate insolvency appointments 10% lower than in the third quarter, and 3% lower than the quarter 3 of 2009.
It is important to remember that times remain tough and there are likely to be many challenges ahead. Businesses need to focus on profitability and cash flow and ensure that their Strategy and business model is dynamic and adapted to changes in markets and circumstances.
During the last year CR Corporate Solutions has worked with a number of companies experiencing cashflow problems and suffering from the impact of the general economic turndown. Whilst not all of these companies have been experiencing potentially catastrophic situations, our Turnaround skills have been of vital importance in these situations.
Time is usually of the essence in these situations and it is important that we are approached as early as possible to allow us more time to assess the situation and to hopefully make the necessary changes, whilst working alongside the company's Financial Stakeholders.
In the coming months, HM Revenue and Customs is expected to toughen its stance in respect of overdue debts and this could increase insolvency proceedings. Latest statistics indicate that the HMRC rate of rejecting "Time to Pay" applications had doubled towards the end of 2010.
Working capital pressure as we move into better economic times can also cause an additional and unexpected strain that needs to be well managed.
As an Associate Member of the Association of Business Recovery professionals (R3), we have a vested interest in making a success of these difficult trading and "cashflow challenging" situations and look forward to assisting more companies with "challenges" in the coming months.
We are always happy to have an early discussion to establish how we may be able to assist.
Regulated by the Institute of Chartered Accountants of Scotland
for a range of business activities.
Registered in Scotland No. 369678. VAT No. 981 8656 66.
Site by Buzz Digital © 2010 - 2013