Business distress level falls to lowest on record

13 January 2016

According to the latest research from R3, only 17% of businesses have reported a ‘key distress indicator’, compared to 28% last September. 

Indicators include a fall in sales, having to make redundancies, frequent use of maximum overdraft and decreasing market share. 

In March 2012 when these records began, 64% of businesses showed signs of distress. This is a huge decrease showing businesses are becoming more stable and improving their finances. Less and less businesses are becoming insolvent, a fact reflected in the quarterly insolvency statistics released by the Insolvency Service. 

R3 President, Philip Sykes, commented “The level of businesses in distress has plummeted since our survey began in 2012. This isn’t surprising given the current state of the economy. There has been a reasonable level of growth in recent years and the record low interest rates have facilitated high liquidity.”

He continued, “The long-running survey of UK businesses also found that growth was at a new record high. 69% of businesses reported at least one indicator of growth, a marginal increase from the previous high (68%) in April 2015. 

“While it’s positive to see the proportion of those experiencing at least one indicator is at an all-time high, the results suggest that fewer firms are seeing multiple signs of growth. Many businesses underwent a period of rapid growth in recent years, but now have started to reach a plateau.”

Overall, very positive news for SMEs and larger companies.