The easing of Covid-19 restrictions over the summer has failed to stop a sharp increase in the number of business insolvencies across England and Wales.
According to the latest official figures, corporate insolvencies increased by 22.9% to 1,348 in August 2021 compared to July’s figure of 1,097.
The year-on-year level of corporate insolvency also rose for a fourth consecutive month, with a 71.1% year-on-year increase last month from the 788 cases in August 2020.
With the temporary rules which have helped businesses avoid insolvency during the pandemic about to come to an end, the North East deputy chair of insolvency and restructuring trade body R3, Chris Ferguson, is advising regional business owners to be on the lookout for signs of business distress within their companies’ finances – and to act on them as soon as any become visible.
Chris Ferguson, who is Head of Recovery and Insolvency at RMT Accountants & Business Advisors in Newcastle, says: “The latest corporate insolvency figures highlight how much tougher trading conditions have been for businesses than this time last year, and the toll the pandemic has taken on business finances over the last 12 months.
“The continuing increase in the number of Creditors’ Voluntary Liquidations suggests that, despite the opening up of the economy, there are a significant number of owners who are opting to close their businesses after a year and a half of trying to navigate their way through the pandemic.
“This comes despite August being one of the better months for businesses since the start of the pandemic, with the lifting of the final restrictions and the continued impact of the vaccine rollout meaning more people are working, shopping and spending, and that looks set to continue as we enter the autumn.
“But with the furlough scheme ending at the end of September, North East companies need to be on alert for any signs of distress within their businesses and seek early advice where needed.
“If a company has problems paying rent, staff or suppliers, has issues with cashflow, or its directors are concerned about its future, now is the time to seek advice from a qualified professional, rather than waiting until the problem has become far worse.
“Early advice significantly broadens the range of options available to businesses and provides time for owners, management teams and advisors to identify and implement appropriate restructuring strategies to deliver a successful turnaround”