Insolvency risk rises for North West businesses

More North West businesses are at risk of insolvency than at the turn of the year, as many struggle to overcome economic and political uncertainty, new research shows.

Figures from insolvency and restructuring trade body R3 reveal a 2% rise in insolvency risk between the start of 2017 and now.

Some 26.6% of businesses in the North West are deemed to be at above average risk of becoming insolvent in the next 12 months, compared to 24.2% that were in a similar situation in January.

That equates to more than 95,000 businesses that could be left struggling should they face unexpected outlays, a loss of custom or any other issue that influences their finances.

R3’s North West Chairman Paul Barber suggests that economic and political uncertainty have made it difficult for firms to plan ahead, meaning many key decisions “get put on hold”.

He also adds that a drop off in consumer-driven momentum means they are spending less, while businesses need to overcome pension enrolments, payroll tax and other rising operational costs.

All of these factors mean that higher insolvency risk scores are more likely. The number of early stage businesses has also increased steadily and they are also deemed to be more at risk that their established counterparts.

Bureau van Dijk’s Fame database shows that more than 10,000 businesses were set up in the North West between January and July, meaning more than 357,000 firms are active in the region.

Businesses operating in the technology and transport sectors were deemed to be most at risk of insolvency by R3, with 33% and 33.3% respectively deemed to have above average risk.

Some 30.8% of professional services firms also display above average risk levels, while the manufacturing and agricultural sectors have also seen insolvency risk rise in 2017.

It is worth noting that the retail, hotels, pubs and restaurant sectors all saw their risk levels decline in the year to date.

Businesses need to remain watchful and should seek advice and assistance from corporate insolvency specialists if they have fears over their finances at the first opportunity.


By Phil Smith


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