Following the Q4 2022 company insolvency data published this morning, which showed company insolvencies were 30% higher than in Q4 2021, brokers and financial experts have commented:
Mark Grant of Gloucester-based business finance broker, The Business Finance Branch: “It’s brutal out there right now. In the fourth quarter of 2022 and into 2023, we have seen an increase in businesses fearing that administration may become an inevitability, as their cash flow position has deteriorated so seriously in recent months. Instead of simply not being profitable, they are in some cases out of cash full stop and not able to meet the fixed overheads and staff costs that enable them to operate. Businesses that can smooth out cash flow and remove the large, one-off cash calls in favour of lesser, but more regular income and outgoings, will stand a better chance of riding out the current economic headwinds.”
Ian Hepworth, director of Croydon-based Funding Solutions UK: “We are seeing more and more companies struggling as they are enveloped by a perfect storm of rising costs, disrupted supply chains and reduced supplier credit. HMRC are also looking for tax arrears to be repaid and seem less helpful on time to pay arrangements. The whole business finance market has tightened up its credit policies. Valuations on assets are coming in lower and the percentage that lenders are willing to lend against the assets is reducing in many cases. It’s a real double whammy. The banks made a point of supporting businesses through Covid and beyond in an attempt to right their wrongs from the financial crisis a decade before. However, they too are now withdrawing support.”
Ed Rimmer, CEO of Bath-based SME finance provider, Time Finance: “Many firms are already in financial distress and struggling to make ends meet. Insolvencies will continue to climb in 2023 as the strain to keep up with the day-to-day costs of running a business mounts. When otherwise viable businesses are hit by rising costs and forced to close, our economic recovery suffers. What’s encouraging is to see more businesses seeking financial assistance to free up working capital and relieve cash flow pressure. This will be crucial if businesses are to overcome the challenges that 2023 will continue to throw at them.”
Marcus Wright, MD of Bolton Business Finance: “Sadly we are seeing an increase in businesses with large amounts of short-term borrowing that have simply run out of road. Energy bills in particular are hitting businesses seriously hard in some sectors like restaurants and hospitality. And though many have been protected by fixed contracts, they are now expiring. Add into that inflation and a less forgiving HMRC, and it means we will see far higher insolvencies this year. 2023 is shaping up to be a year to forget.”
