Phil Wood, Managing Director of Barringtons Corporate Recovery and President of the Staffs, Salop and Wolverhampton Society of the Institute of Chartered Accountants reports that the Q4 insolvency statistics released today show a mixed picture with a reduction on Q3 company insolvencies but a static picture in individual insolvencies. However, these figures are expected to get worse for businesses in Q1 2018, as consumers are tightening their purse strings post-Christmas. ICAEW reminds businesses facing insolvency to seek help earlier and help encourage recovery.
Clive Lewis, ICAEW Head of Enterprise, comments: “Underlying 2017 business insolvency figures showed an 11% reduction on 2016 but these figures are expected to increase in 2018. In December and after Christmas consumers have reduced their discretionary spending in favour of the basics such as food. This will continue to have a negative impact for businesses leading to an increase in the business insolvency figures as well as personal bankruptcies, particularly individual voluntary arrangements (IVAs).
“The difference between businesses that survive and thrive and those that fail is how well they manage difficulties. Whilst a percentage of insolvencies is unavoidable, many cases are not. Owner/managers must know where they are on the decline curve – help must be sought early as they move beyond underperformance into a period of stress, before they reach crisis point. If they do so, it is possible to move away from insolvency, towards crisis management, stabilisation and finally onto recovery.”
Phil stressed that in his experience, taking advice quickly is the single most effective step business owners can take to ensure the most positive outcome from problems encountered.