Welsh IT and tech firms at heightened risk of insolvency

Technology and IT firms in Wales have been deemed those most at risk of insolvency in the year ahead, according to insolvency trade body R3.

A third of businesses in the sectors are reportedly deemed to be facing greater than normal risk in 2017, which represents the highest ratio of the ten industries monitored.

Tourism operators and professional services firms are also said to be facing considerable risk, with the longevity of 31% and 29% of them respectively under threat.

Compared to the average for the country which stands at 23%, all of these sectors are deemed to be at heightened risk.

R3 has pointed out that 2016 was a tough year for many businesses, which was made more difficulty by widespread political uncertainty in the wake of the EU referendum vote.

The technology and IT sectors could be hit by trading limitations or funding restrictions post-Brexit, and this could impact on their finances and their ability to drive growth.

Given the uncertainty, a fall in investment is expected, although R3 also states that many firms are waiting to see how the situation develops before deciding how best to manage their finances.

For those operating on tight margins, they may wish to refinance in order to drive growth, solidify their existing position or to turnaround from a position of difficulty.

Depending on the company and its situation, such a move may require the careful management of debts, finance and assets in order to achieve the best results.

A number of alternative finance methods can also provide innovate means of accessing funding, although it is important to find a solution that works best for a certain business – just because a solution works for one, does not mean it will work for all.

As well as the IT industry, tourism operators were also found to be at heightened risk of insolvency as a result of the turbulent markets that they operate in.

With changing consumer habits, economic uncertainty, terrorism and the weather all influencing spending, businesses in the sector need to continually evaluate their position in order to protect themselves from insolvency.

Those that fail to do so can place themselves under further risk, may become less competitive or may no longer be deemed relevant to their target customers.

By Phil Smith

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