National figures released by The Insolvency Service show a rise in liquidations in more than eight out of ten authority areas across the UK in the last year compared to the year before the pandemic.
Monahans, a South West accountancy and business advisory firm, can confirm a 90% increase in enquiries for corporate insolvency compared to last year, with data suggesting a record number of enquiries for 2023.
What’s more, the firm received 22% more enquiries in January to May 2023 compared to the equivalent period in 2020, a time when businesses were seriously challenged.
In January, government figures showed around 22,000 companies suffered insolvency last year in England and Wales – the highest number of cases since 2009. Although the government provided around £400bn ($515bn) of support to businesses, the prolonged effects of an economic downturn, supply chain issues and considerable debt, with the added combination of increasing rent and sky-high overheads, have added excruciating pressure to many organisations. As small businesses are hit from all angles, their resilience is depleting and many are being forced to turn to voluntary liquidation as they see no other option.
Commenting on this, Monahans business services partner, Clare Bowen, said: “We have identified businesses who are experiencing ‘fatigue’ where they have worked unbelievably hard to get through the battles of COVID-19 to keep their organisations going. Even though their businesses are starting to do well, a lot of their profit is being taken up by the backlog of debt and bounce back loans.
“We are seeing real difficulties across the board, no section is immune, but construction, retail and hospitality have been the most challenged industries.”
Monahans business recovery and insolvency partner, Steve Elliott, added: “We are seeing construction businesses taking a big hit. The smaller contractors are getting squeezed as they’re not being paid by the bigger firms, and this adds pressure down the line.
“We have also seen retailers struggling to receive stock where their suppliers are based in European countries. Brexit has added an extra layer of pressure which has caused delays and forced them to close their doors.
“The current landscape is a tough one to navigate and we expect to see business fatigue really start to kick in over the second half of the year. Our priority is to support clients through this by helping them manage their cashflow, build plans to pay back debts and assist conversations with HMRC to get them back on track.”
As economists warn that the inflation crisis will last up to a year, interest rates will continue to impact businesses. An array of challenges, including the demands to increase staff wages to account for the cost of living, price growth of materials and supply chain obstacles will be issues for the foreseeable future.
Businesses are advised to carefully assess their short-term strategies to ensure their survival and should speak to an expert if they need help in creating a robust plan to sustain their business, advice on tackling debts or require assistance in closing a business.