UK Business Distress at Record Low

The latest Business Distress Index from insolvency trade body R3 has revealed that levels of business distress in the UK are at a record low, with only a quarter (24%) of businesses reporting a key indicator of distress.

Every indicator of distress tracked by R3 is apparently at its lowest since the research began. The figures show that 10% of businesses are experiencing decreased profits, 11% are experiencing falling sales volumes, 6% are seeing market share fall, 8% are regularly using their maximum overdraft, and 6% are making redundancies.

“Having stayed constant throughout 2014, UK business distress levels have fallen once more,” commented Phillip Sykes, President of R3. “Many companies will feel they have successfully negotiated the trickier parts of the rapid economic growth we saw last year. As growth slows, businesses are less at risk of over-extending themselves.”

“The flip side of this is that signs of growth may start to become rarer as business growth hits a plateau,” he added.

The news is particularly positive for smaller businesses, which apparently are recording the greatest drop in signs of distress. Only 20% of sole traders are reporting one or more signs of distress, compared to 50% in November 2014.

Business confidence is strong, says R3, with just 4% of businesses expecting their activity to decrease in the next year. Around 47% expect it to increase and 48% think it will stay the same.


Insolvency Profession Helps Rescue Many Insolvent Businesses

The UK’s insolvency profession has played an important part in helping to rescue approximately two-in-five insolvent businesses in 2013-14, according to research by ComRes and R3, the insolvency trade body.

The research found that R3 members helped around 6,700 businesses (41% of formal insolvencies) continue trading in some way after entering insolvency, helping to save around 230,000 jobs.

“There is much more to insolvency than business or personal finance failure,” explained Phillip Sykes, President of R3. “As the economy continues to recover from recession, business recovery and renewal will be an important part of the economic landscape.”

“Insolvency practitioners witness first-hand the human cost of business failure and will make every effort to protect jobs where possible,” he added. “The sooner insolvency practitioners’ advice is sought, the more chance there is of business and job rescue. The insolvency profession is increasingly helping businesses outside of formal insolvency procedures too.”

In total, around 10,400 businesses continued operating after working with the insolvency profession, either benefitting from support in a formal insolvency or working with the profession to avoid insolvency. These businesses employed approximately 540,000 after receiving support.

“The next five years could see key changes to the insolvency landscape,” commented Phillip Sykes. “Household debts are rising again, while the current climate of creditor forbearance, record low inflation, and record low interest rates may not last. Problem debt is a major policy issue for the new Government; the insolvency profession has a unique insight into the effects problem debt has – and, importantly, how it can be tackled.”

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Inaugural roadshow gets under way

After months of preparation the first mlm Accomplish roadshow finally got under way this week. The team delivered "The Business Debt Arrangement Scheme - a Lifeline for Sole Traders and Partnerships?" CPD seminar to over 100 accountants and solicitors across venues in Glasgow, Edinburgh, Dunfermline and Kilmarnock.

Having sat on the Scottish Government's Business DAS working group and recently had the first (and only) Business DAS approved within the seminar, mlm Solutions' Senior Manager, Ian Brown draws upon his practical experience to provide an overview of Business DAS, what we have learned from the first case and what lies ahead in the future. The topic has, so far, evoked a lively debate as delegates take the opportunity to tap into Ian's knowledge and expertise.

There is still time to register for the events taking place in Dundee, Perth, Galashiels, Livingston, Dumfries, Inverness and Aberdeen.

If you are unable to attend any of the events we are pleased to advise that the Glasgow event was recorded and it will be made available as an online learning module in mid-June.