Insolvency levels are set to go up by 21% this year with SMEs struggling massively to balance their books.
Over 500,000 employees are at risk of losing their jobs with SMEs dealing with serious financial challenges.
Quantuma statistics based on 6,500 businesses are at a higher-than-average risk of insolvency due to rising costs, higher taxes, Brexit difficulties and pandemic impacts.
The advisory firm forecasts that insolvencies will increase this year to 21%, compared to figures in 2021.
These findings note that 19,000 businesses are likely to fail by 2024 – the highest estimation for corporate insolvency in the past ten years.
Start-ups that have been around for less than three years are at particular risk. This is perhaps because they will need money to plough into growth and they may not have that money readily available to them. There is less evidence of sustainability.
Research shows that staff levels are usually low. Small businesses employed an average of 8.4% fewer people than they did in February 2020. The hospitality industry had 22.7% fewer jobs than two years ago as a result of the pandemic and small manufacturing firms have 15.1% fewer available jobs.
Insolvency – Wage increases
Wages have increased to try and keep up with the cost-of-living crisis. Salaries have gone up by 4.3% in February – the highest since research started in 2017 – and hospitality has seen the highest percentage rise in pay (7.7).
There was some positivity in reports. Sales for SMEs had increased by 8.8% in February when compared with the same month in 2020. However, there is little evidence to suggest that this increase will continue sustainably in the future.
Insolvency – Late payment problems
SMEs are being paid later than ever on average, according to figures.
From the analysis of 500,000 companies, it has been found that invoices are taking longer to be paid. Some companies have been averaging returns 8.2 days after the agreed date in their payment terms. Late payments have only added to the strain that is being felt from SMEs in financial difficulty.
At Business Helpline, we can help you to straighten out your finances for a more sustainable future. We can also help you to refinance in order to meet your needs for optimum growth. Refinancing can help you to:
- Purchase a larger amount of raw materials
- Pay the wages of more staff members in order to reach deadlines
- Pay off existing debts that are preventing growth
Get in touch with us at 0800 088 2142 if you want to take back control of your financial future. Your company might be going into insolvency or it might need to go into insolvency. Whatever your situation, we will have your back.