There is some positive news for businesses in the East Midlands as monthly research by insolvency and restructuring body R3 shows that, for the first time in over a year and a half, there has been a widespread decrease in the proportion of local businesses at elevated risk of insolvency.
The October figures, which are compiled using Bureau Van Dijk’s Fame database, reveal that nine of the 11 key business sectors monitored by R3 in the region are showing an increase in their financial stability. Only the tourism and professional services sectors registered decreases, albeit marginal ones.
The research also highlights that the East Midlands agriculture sector is one of the three most financially stable in the UK – alongside London and the North East – with 33.5% of businesses at heightened risk of insolvency compared to the UK average of 37.5%.
The East Midlands business sectors with the lowest insolvency risk levels are agriculture (33.5%), restaurants (35.3%) and pubs (35.4%). Local sectors with the highest proportion of businesses at above normal risk of insolvency are professional services (52.4%) and technology & IT (50.4%).
R3 Midlands Chair Chris Radford, a partner at the Nottingham office of Gateley plc, said: “This research should not be seen as definitive proof of a turnaround in business liquidity; it is more an indicator of a possible slowdown in heightened insolvency risk.
“We should be in no doubt that a large number of our region’s businesses are still facing strong challenges to their success, but this glimmer of positivity gives some hope for the future.
“In the meantime, it is vital for business owners to monitor company finances carefully and plan for all eventualities. If cash flow becomes a major challenge, professional advice should be taken at the earliest opportunity.”