West Midlands firms continue to face rising insolvency risk
Businesses in the West Midlands are more at risk of insolvency than they were at the turn of the year, according to the region’s branch of trade and restructuring body R3.
The latest data highlights that 26.1% of firms are deemed to be at above average risk of insolvency, equating to more than 71,000 firms.
It is a sharp contrast to January’s figure when 23.6% of firms found themselves in a similar position – a rise of 2.5 percentage points in the space of six months.
All of the figures come from Bureau Van Dijk’s Fame database and the research from R3 Midlands pinpoints the transport and haulage, and technology and IT sectors to be most at risk.
Whereas 33.7% of IT firms face an above average threat of insolvency, the figure rises yet further for transport firms to 34.5%.
There was good news for restaurants and tourism operators though, as risk levels decreased for businesses in those sectors.
The overall situation mirrors the one in the North West of England, where the levels of insolvency risk have also risen to date in 2017.
R3 Midlands chairman Chris Radford said that corporate insolvency rates are starting to pick up again following a relatively flat 2016.
He added that while creditor patience and low interest rates have helped to keep levels of corporate insolvency down, growing economic challenges mean vulnerable businesses are increasingly at risk.
At the same time, the introduction of the National Living Wage, pension auto-enrolment and uncertainty surrounding Brexit have also placed financial pressures on small businesses.
The data suggests that thousands of businesses are towing a tight financial line and they are encouraged to keep a watchful eye on their finances – it is best to act quickly in such instances as this can increase the number of potential solutions that are available.
By Phil Smith