Small Businesses in ‘distress’ number triples

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New data released by Accountancy firm Mazars has shown a worrying rise in the amount of UK Small Businesses in financial distress. Over 135,000 Companies were shown to be suffering from financial strain this month, treble the pre pandemic average.

Retail and service Businesses are the hardest hit. Almost 60% of Businesses in these sectors are the hardest hit. Sectors that have been allowed to ‘reopen’ have been showing signs of improvement. Construction companies make up 7.9% of the total distressed firms whilst manufacturing is at 6.7%

The capital city of London has been hit particularly hard as over quarter of businesses are now in financial distress. Followed by Businesses based in the south east which accounts for 18.44%

Paul Rouse, a Partner at Mazars commented on the figures “We are starting to see the significant financial impact of the pandemic and Brexit on companies across the UK, both private and listed. During more normal circumstances, we expect between 40,000 and 50,000 companies to trigger one of our negative health markers. Today- even with many government support measures still in place – we are seeing roughly three times that amount: 135,000.”

“Unfortunately, we predict that even at this higher rate that this is in fact the calm before the storm with further significant amounts of business distress likely to be experienced as support measures come to an end.”

“Geographically, London is the most affected – with over a quarter of our sample based in the capital (perhaps to be expected, given business density in the city). By comparison, those businesses in East Anglia and Northern Ireland have seemingly been impacted the least.”

“On a more positive note we are hopeful of being able to assist many of these businesses and avoid a potential boom in insolvencies if advice is sought quickly before the road back is too steep”

Listed Business (PLC) Data Data on 01 March 2021 Data on 01 January 2020
Category Company Health (100 being the best) Count % Count %
Green 50 + 3,304 69.3% 3,493 78.0%
Amber 11 – 49 339 7.1% 479 10.7%
Red 10 or less 64 1.3% 162 3.6%
Red – Specific Reason 10 or less 1,063 22.3% 343 7.7%
Total   4,770 100% 4,477 100%
  Average Score 39 49
 

*Data Source Mazars RADAR

*Red alert: normally Mazars expects around 40,000 companies to be in distress, today the figure is 134,437

Region Mazars Negative Health Marker NHM % Industry Mazars Negative Health Marker NHM %
South East (inside M25) 34,389 25.58% Services 50,503 37.57%
South East (outside M25) 24,793 18.44% Retail 28,255 21.02%
West Midlands 10,166 7.56% Finance, Insurance & Property 16,406 12.20%
Yorkshire & Humberside 9,254 6.88% Construction 10,610 7.89%
East Midlands 8,012 5.96% Manufacturing 8,934 6.65%
Scotland 7,566 5.63% Transports, Communication & Utilities 8,205 6.10%
Wales 7,560 5.62% Wholesale 5,600 4.17%
South West 7,369 5.48% Public Administration 4,073 3.03%
North West 6,939 5.16% Agriculture, Forestry & Fishing 1,352 1.01%
Greater Manchester 6,008 4.47% Mining 473 0.35%
North 4,169 3.10% Unclassified 26 0.02%
Northern Ireland 3,854 2.87%
East Anglia 3,351 2.49% Grand Total 134,437 100.00%
Unclassified 957 0.71%
Channel Islands 50 0.04%
Grand Total 134,437 100.00%

 

Businesses that are owed money are being urged to take action to protect themselves. Tony Smith from Debt Collection Agency Comparison site Best4DebtCollection.co.uk said that “many Business owners are fearful of acting in the current climate for the fear of being chastised by trolls on social media or local media outlets.”

“At some point something has to give and the time is now if your Business is facing insolvency.

Taking action to recover unpaid business invoices surely has to start before it is too late for some UK Companies.

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