R3, the insolvency trade body, has interviewed senior financial controllers at over 500 companies and has come up with the Business Distress Index. Its findings have been published this week.
Decreased profits have been identified as the most common current sign of distress by 49 per cent of UK businesses. Other indicators of problems are the following;
14% of respondents are finding it difficult to pay invoices on time
13% have had to make redundancies.
6% say they have taken on new borrowing to pay down existing debt.
44% had falling sales.
14% have said they are having difficulty in paying invoices
Other interesting findings are that on the whole the respondents believed that the banks were more supportive than HMRC. Trade creditors were the biggest worry for small businesses. Debts were the biggest worry for manufacturing businesses.
On a regional basis it appears that the Midlands is showing more distress than other areas with 81% of respondents showing one or more signs of distress
This survey doesn't really tell us much at this stage but over time it may highlight trends or changes in business's outlook.
There was one interesting statistic which was that only 3% of those surveyed thought that they may go into an insolvency situation in the next 12 months. Confidence is good for business but they need to have a plan B incase things go wrong! If you think you may be insolvent then take a look at our pages on the tests for insolvency. At least be prepared and know your options.