Spiralling operating costs behind rise in insolvency says FSB
A drastic rise in operating costs is behind the rising number of company insolvencies that was noted in 2017, the Federation of Small Businesses has said.
Company insolvencies jumped by 4.2% to near 17,250 in the last year, while nearly 4,400 businesses entered insolvency in the last three months of the year alone.
FSB National Chairman Mike Cherry has described the figures as a 'real concern', before adding that a record number of small business owners are looking for a way out.
He explained that one in seven has said they expect to either sell, hand-over or close their business in the first three months of 2018.
'Inflationary pressure, disappointing domestic growth and flagging consumer demand are all weighing on the small business community,' Mr Cherry said.
With the proportion of small firms reporting a surge in operation costs at a five-year hgh, business confidence has also taken a hit.
The latest figures do not include the potential impact that the collapse of Carillion may have on supply chains in the UK.
Mr Cherry has explained that a number of contracts are yet to be reassigned, while an estimated 30,000 could be owed finance.
Late payment practices and job losses are expected and the FSB chairman has called on the Government to offer more public contracts to smaller firms in order to reduce insolvency numbers.
For those businesses that do experience financial difficulties, it is imperative that they seek appropriate advice and act quickly.
It should be possible to find solutions that meet the needs of the business itself, its employees, its creditors and any other people with interests.
A growing number of firms are using the administrative procedure to get some needed breathing space, especially as placing a firm into administration is now simpler than in the past.
By Phil Smith