Business
Latest Red Flag Alert Report for Q3 2021
Latest Red Flag Alert Report for Q3 2021.
About this update from Btg Consulting Plc
[{"type":"text","content":"\n \n \n \n RNS Number : 6299Q\n Begbies Traynor Group PLC\n 29 October 2021\n \n \n \n \n \n \n \n \n \n \n \n 562,000 UK Business Facing Financial Distress in Q3 2021 with Dramatic Rise in Court Action Fuelling Insolvency Concerns\n \n \n \n \n \n \n \n \n \n \n \n \n · \n \n \n 562,550 UK businesses in significant financial distress during Q3 2021- a 14% decrease over the last quarter\n \n \n \n \n · \n \n \n 139% rise in CCJ's during Q3 2021 as businesses resort to using the courts to recover debts\n \n \n \n · \n \n 17% rise in more serious critical business distress in the past quarter\n \n \n \n \n \n \n The latest red flag research for Q3 2021 from Begbies Traynor, which monitors the financial health of UK businesses has recorded 562,550 businesses in 'significant financial distress1', with a 139% uplift in CCJs2 in the past year.\n \n \n \n \n \n However, the number of businesses in significant financial distress has fallen 14% since Q2 2021. This fall can most likely be attributed to rising corporate revenues as pent-up customer demand has fuelled a boom in consumption and allowed some companies to improve their short term debt position, whilst improving cashflow. Whilst this has eased the immediate threat to many companies' survival, there is uncertainty if these trading patterns will continue. \n \n \n \n \n \n Unfortunately, considerable challenges lay ahead for UK businesses, including constrained raw material availability, rising inflation, labour availability, spiralling energy prices and rising COVID rates, combined with a winding back of government COVID support measures that could yet impact failure rates in Q1 2022 and beyond. \n \n \n \n \n \n CCJ's are often a bellweather for future insolvency and the latest data paints a gloomy picture. Official data shows there were 9,101 CCJs lodged against companies during Q3 2020, rising to 21,769 during Q3 2021, a 139% uplift. This acceleration in CCJ's was also evident between Q2 and Q3 2021 with a 51% increase.\n \n \n \n \n \n The latest official figures show that court activity is picking up as creditors, become more aggressive in chasing debts. \n \n \n \n \n \n This research from Begbies Traynor also found that despite the Q3 improvement in the financial performance of businesses, the numbers...