Ipswich expert fears more company collapses as costs bite

Company bosses have been hit by a host of problems - from soaring costs and higher borrowing rates to cash-strapped customers.

Alistair Bacon, chairman of regional insolvency trade body R3 Eastern and founder of AMB Law in Ipswich, said the challenges were taking their toll as the number of insolvent businesses in England Wales hits a four-year high.

Company directors have been heavily affected by a mixture of long-term economic issues, director fatigue and creditor pressure, he said.

Corporate insolvencies rose month-on-month by 33.6% in August to 2,308 compared to 1,728 in July, and by 18.9% from 1,941 a year ago, Insolvency Service figures show.

The figures also revealed a rise of 71.3% compared to August 2021’s total of 1,347, and by 69.1% compared to the pre-pandemic level of 1,365 in August 2019.

"August’s corporate insolvency figures were their highest for this month in four years as increasing numbers of companies enter an insolvency process in an attempt to resolve their financial issues, or simply shut their doors," said Mr Bacon.

“Creditors’ Voluntary Liquidations remain high as more and more directors choose to wind down their firms, while compulsory liquidation numbers were at their highest this August for four years as creditors continue to pursue the money they are owed.

“The sad fact is that businesses are being hit from a variety of angles – and all these blows have an effect on their bottom line.

"Cost inflation has been a problem for some time and while this is expected to ease it is still sitting higher than many had predicted.

“As a result of this, upward pressure on pay is continuing, while recruitment is a challenge, and people are still cautious about spending money on anything other than the essentials.

He also feared the short-term outlook was bleak.

“It’s unlikely that the picture will improve in the near future as people and businesses face the prospect of increased energy bills and start watching their spending even more closely."

“Our message to directors, therefore, is simple - be alert to signs your business could be financially distressed and seek advice as soon as they show themselves.

"If you’re having problems paying wages, staff or suppliers, if stock is starting to pile up, or if you’re worried about your business and its finances, that’s the time to speak to a qualified adviser.”