It has been reported by Begbies Traynor that there has been a 15% rise in firms suffering “serious” or “critical” financial distress in the first quarter of 2011 with the worst hit sector being bars and restaurants. Leisure and culture and the sports and recreation sector have also suffered rises. This has been attributed to a cut in discretionary spending in the face of anticipated job losses.
Firms should consider their financial position and address concerns sooner rather than later or risk insolvency. It may be that a formal insolvency situation is in the best interests of the firm. Professional advice should be sought at the earliest opportunity where there are concerns.
The evolving financial situation facing most businesses highlights that it is becoming increasingly difficult in business. The key issue is to keep a grip on cash flow.
Businesses need to be more careful than ever when giving credit; credit control has to be better than ever as cash will become tighter as the year unfolds. At the same time funding a business is getting harder with bank borrowing still very hard to secure.
By commercial litigation solicitor, Nicola Whittle