Accounting Firms

723,000 businesses in ‘significant financial distress’, says Begbies Traynor

The research found that there was a 42% increase in significantly distressed companies since Q1 2020 and a 50% increase in distress within the financial services sector

Some 723,000 businesses are reportedly in “significant financial distress” according to the latest Red Flag Alert research for Q1 2021 by Begbies Traynor.

The research found a 42% increase in significantly distressed companies since Q1 2020 and a 50% increase in distress within the financial services sector.

The report revealed that London’s reliance on both the leisure, hospitality and financial services sectors has made it particularly vulnerable to the short-term effects of Covid.

Businesses in London experienced a 46% year-on-year increase in significant financial distress, and a 14% quarter-on-quarter increase However, Northern Ireland and the North West showed an 18% increase, reflecting an “alarming amount”.

Ric Traynor, executive chairman of Begbies Traynor Group, said: “The re-opening of the economy also presents hidden risks for many companies. Overtrading will be a real risk for many and companies should monitor their cash flow very carefully – especially as credit lines have been stretched to breaking in many cases.

STORY CONTINUES AFTER ADVERTISEMENT

“All businesses should take these threats seriously, examine their model and adapt if they are going to survive.”

Julie Palmer, partner at Begbies Traynor, added: “Opening the doors of consumer-facing businesses on April 12th may well seem like a big step in the right direction for many of these companies as they try to shake off the traumatic trading of the last 12 months.

“However, businesses that were profitable before the pandemic, have manageable debt and are still relevant in the post pandemic world could flourish and be the real winners in this climate.”

Back to top button

Please disable your ad-blocker to continue

Ads are the primary way in which publishers generate the revenue needed to pay their staff. If we can't serve ads, we can't pay journalists to write the news.