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.
One of the ways Small Businesses can reduce costs is by minimising spend on overhead costs. Searching for the best broadband deals in the UK can potentially save hundreds of pounds over a year.
