finance

Businesses more likely to fail in first six months of the year – Azets



Analysis of corporate insolvency statistics collected by the Scottish Government from 2011 to 2021 has revealed that businesses are most likely to fail during the first six months of the year.

Accountancy and business advisory firm Azets found that during the decade there were 4.22% more corporate insolvencies in Scotland during the first six months.

It warned businesses to review their plans following increased costs for materials, fuel, staffing and utilities, on top of labour shortages and pandemic-related restrictions.

Blair Milne, restructuring partner with Azets in Scotland, said: “Historically, our analysis of the last decade shows that the number of corporate insolvencies increases slightly in the first six months of a year – as such, it is important that directors now review their current trading position and liquidity, check projected figures for the next 12 months and revisit the costs of any business loans.

“From January to June financial pressures rise significantly as bills from the preceding year start to accumulate in the first quarter,” he continued, adding: “Those businesses already struggling with cash flow and working capital problems will therefore be under severe financial pressure by the summer, if not before.

Milne explained the withdrawal of furlough and other government-backed loan schemes, together with repayments now becoming due, will compound the pressures on businesses.

He concluded: “Unfortunately, the ongoing Covid issues, operating restrictions, declining sales and waning consumer confidence are weighing heavily on many businesses, particularly in hospitality, retail, leisure and construction.”

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