More East Midlands businesses are at greater than normal risk of insolvency than at any point this year, with every regional sector monitored by restructuring and insolvency trade body R3 now showing an increase.
R3’s September statistics, compiled using Bureau Van Dijk’s Fame database, highlight that almost three-in-ten businesses in the region – 28.9 per cent – are now in the elevated insolvency risk band, which is equivalent to around 60,000 companies. This is an increase of 2.8 per cent on last month’s figure and is over four percentage points higher than the proportion in this category at the start of the year.
Of the key East Midlands business sectors monitored by R3 – which include manufacturing, retail, construction, agriculture, professional services, pubs, hotels and restaurants – transport and haulage is the sector with the highest elevated insolvency risk. Over one-in-three of its businesses – 38.5 per cent – carry an above average possibility of insolvency.
On a more positive note, the East Midlands agriculture sector is proving to be more financially stable than almost any of its UK regional counterparts. Despite its insolvency risk increasing by 5.8 per cent compared to last month’s figure, the sector has a lower proportion of businesses at risk of financial failure than any of its nationwide peers except the East of England. Only one-in-five, or 19.1 per cent, falls into the negative risk band.
R3 Midlands Chairman Chris Radford, a partner at Gateley plc in Nottingham, said: “The last quarter of 2017 will be an important test for East Midlands businesses. Many larger firms have been protected from the pound’s recent falls by currency hedges or long-term fixed-price contracts, but these are now unwinding or have since unwound. Businesses of all sizes have also been buoyed by resilient consumer spending in recent months, but much of this is on the back of increased borrowing.
“Going forward, it’s imperative for business owners to monitor their finances carefully and plan for all eventualities. At the first sign of significant cash flow difficulties, it is important to take relevant professional advice. When R3’s members are called in to help early enough, there’s a lot that can be done to rescue and support businesses beyond traditional insolvency solutions.”