The chair of the Midlands branch of insolvency and restructuring trade body R3 is urging directors of the region’s businesses to seek professional advice if they are concerned about cash flow, as corporate insolvency figures continue to rise compared to the same time last year.
Latest figures published by the government’s Insolvency Service show that while the number of companies entering insolvency decreased by 8.9% in May – to a total of 1,817 compared to April’s total of 1,995 – there was an increase of 79.2% compared to May 2021’s figure of 1,014.
R3 Midlands chair Eddie Williams, a partner at PwC in the East Midlands, said: “The monthly fall in corporate insolvencies has been driven mainly by a reduction in Creditors’ Voluntary Liquidations. However, numbers for this process and for overall corporate insolvencies are considerably higher compared to this time last year, as well as to May 2020 and to May 2019.
“This suggests that although the current economic challenges are continuing to hit businesses hard and are pushing a significant number into insolvency, insolvency trends are still uneven.
“In recent months, firms have been buffeted by rising costs, falling consumer confidence and reluctance to spend on anything other than the essentials, which has meant that they haven’t made the additional income they needed to offset increased expenditure.
“There has been no time to draw breath between the issues caused by the pandemic and those arising from our current economic challenges, and many businesses who have survived so far are now starting to struggle. Rising interest rates will add extra costs for firms to overcome.
“The Government’s insolvency figures should be a timely prompt for any company director whose business is struggling. Objective advice should be sought from a qualified, professional source to decide the best path forward – and the earlier this is done, the better.
“Most R3 members will give an hour’s free consultation to potential clients to enable them to understand more about the circumstances of the business, and to outline the options available to help them improve the situation.”