The number of so called "Zombie Businesses" has been declining significantly in the last quarter when compared to the same quarter last year.
According to Red Flag Alert, the research service for Begbies Traynor, levels of ‘critical’ financial distress among UK businesses have fallen 39% compared to Q2 2012. This is a significant fall in numbers. The decline from Q1 of this year was 9%. Interestingly the fall has been seen across all sectors of the economy with food and leisure performing particularly well.
Critical problems by sector:
|Bars & Restaurants||223||172||-23%||135||172||27%|
|Food & Bev Manufacturing |
|Ind Transport Logistics||115||65||-43%||67||65||-3%|
|Printing & Packaging||34||22||-35%||24||22||-8%|
|Spors & Recreation||33||24||-27%||34||24||-29%|
|Telecoms & IT||124||102||-18%||110||102||-7%|
Critical distress is defined by serious delays in processing payments and outstanding legal actions by creditors. In addition the alert service monitors the general financial health of the companies by monitoring their results posted at Companies House.
The economy has certainly been improving over the last few months which is reflected in these figures. However, still the greatest risk to small companies is the lack of finance. There are many alternative forms of finance out there that are not attached to the main banks. See this page on finance for details.
Alternatively if the business is really struggling then a CVA or company voluntary arrangement is often the best solution as a proportion of the debt can be written off.