ICSM Business Insolvency News: shock at biggest rise in insolvencies since the Credit Crunch of 2007-2009 as cash flow crisis mounts

By Harry Mottram: ICSM’s CEO Ian Carrotte said it was the worst kept secret in the British economy that thousands of firms are close to collapse due to a lack of cash flow. He said the numbers of firms that were officially in a state of ‘critical financial distress’ had risen rapidly as customers and their suppliers have put a halt to spending.

He said: “We have seen companies literally ‘sitting on their hands’ having been spooked by the Cost of Living Crisis and all the warnings about a possible recession. It feels like there is a recession but the economy is essentially flat-lining which has seen a general freeze on spending. Inflation is also a factor pushing up just about everything along with interest rates, energy costs and tax rises. The figures of thousands of firms crashing in the last three months is shocking and are the worst we have seen at ICSM since the Credit Crunch Crisis of 2007-2009.”

Now his concerns have been backed up by the latest figures on insolvencies in England and Wales in the last three months. Insolvency company Begbies Traynor said there was big rise in the numbers of companies that were at risk with 38,000 companies in critical financial distress, according to data prepared by analysts Red Flag for Begbies Traynor.

The BBC reported that Julie Palmer, from Begbies Traynor, said this was down to a combination of higher inflation and borrowing costs twinned with weaker consumer confidence and demand.

"Tens of thousands of British companies are in financial dire straits now that the era of cheap money is firmly behind us," she said, "Businesses that had loaded up on debt at rock-bottom rates, and were only able to cling on during the pandemic thanks to government support, must now deal with a financial reality check as higher interest rates hit working capital for the foreseeable future. Taken together with stubbornly high inflation and weak consumer confidence, many of these businesses will inevitably head towards failure."

One business sector that has seen business do well this year are insolvency practitioners. Begbies Traynor Group have seen profits rise up by 16% to just over £20 million in the last set of figures for the financial year.

+++++++++++++++++++++++++++ 

+++++++++++++++++++++++++++++++++++

ICSM CREDIT
For information on ICSM visit www.icsmcredit.com or call 0844 854 1850.
ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.com. Ian.carrotte@icsmcredit.com