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24% of UK Businesses are 'Distressed'

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Insolvency body, R3's Business Distress Index, shows that 24 per cent of businesses are 'distressed' – which is a record low.

In fact, R3's research, which involves tracking every indicator of distress, study shows that all said indicators are at their lowest levels:

  • 10% of businesses experienced decreased profits;
  • 11% have seen sales volumes drop;
  • 6% have seen a market share fall;
  • 8% regularly max-out their overdraft facilities; and
  • 6% have made employee(s) redundant.

Encouragingly, 47 per cent of businesses expect their activities to increase over the next 12 months, while only 4 per cent believe they will decease.

There is also good news for smaller business across the UK, with the percentage of sole traders reporting one or more signs of distress dropping from 50% in November 2014 to 20% in recent times.

Commenting on his organisation's findings, President, Phillip Sykes, stated:

"Having stayed constant throughout 2014, UK business distress levels have fallen once more. Many companies will feel they have successfully negotiated the trickier parts of the rapid economic growth we saw last year. As growth slows, businesses are less at risk of over-extending themselves.

Sykes added:

"Although the largest businesses continue to experience the fewest signs of distress, it is encouraging to see difficulties for smaller businesses easing. It's been a particularly difficult few years for many sole traders and they're only now beginning to see recovery."

It's not all-good news however, and with the number of businesses investing in new equipment failing, Sykes has recommended caution:

"The flip that signs of growth may start to become rarer as business growth hits a plateau."

"While the level of growth has returned to its peak, the pace of growth is weakening slightly. A higher number of businesses are seeing at least one indicator of growth but fewer are experiencing multiple growth signals..."

"...Looking ahead, businesses face a mixed picture. Although the likely date of an interest rate rise continues to be moved further into the future, a rise will come eventually. The Bank of England's growth outlook remains solid but has been downgraded. And a referendum on British membership of the EU could cause uncertainty for business."

Contact Us – UK Legal Insolvency Litigation with Advantage

Whether you wish to commence legal proceedings or challenge those that are being brought against you, our specialist insolvency team can guide you through the procedures. Further, if are worried about the costs involved, Advantage Litigation Services have the skills and expertise to help you find a way of funding commercial litigation without risking your personal finances or those of your business. Click here to contact us today or call 0800 160 1298 to see how we can help.

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