Directors at Struggling Businesses Urged to Seek Insolvency Help Sooner

Directors whose companies are struggling to stay afloat financially are being advised to seek expert insolvency support sooner rather than later.

The latest official insolvency statistics show that there was a big increase in the number of business failures across the UK in 2022, with company directors often not seeking out third party support in a timely fashion. 

For Christina Fitzgerald, president of the insolvency and restructuring trade body R3, the issue is an important one, particularly with accountants expecting 2023 to be another tough year for UK SMEs.

“2022 was the year the insolvency dam burst,” said Ms Fitzgerald in a statement. “After two years of being supressed by government support programmes, corporate insolvency numbers hit a 13-year high last year.

“Our message to anyone who is worried about their finances is simple: seek advice as soon as possible.

“It’s incredibly hard to talk about your money worries, but doing so will give you more options, more time and potentially a better outcome than if you’d waited till the problem worsened.”

Speaking to Accountancy Age recently, former president of R3 Colin Haig agreed: “Directors need to be alert to the signs of business distress and seek help as soon as they show themselves.

“If a firm has cashflow issues, problems paying staff, rent, taxes or suppliers or is seeing stock start to pile up, that’s the time to speak to an appropriately qualified advisor.”

According to the government’s latest data, there were 22,109 corporate insolvency cases recorded across England and Wales over the course of 2022.

Those figures represent a 57 per cent increase compared with 2021 and the highest number of insolvencies recorded in a 12-month period since 2009.

Reflecting on the circumstances company directors have been facing recently, Ms Fitzgerald from R3 said: “After nearly three years of trading through a pandemic…many directors simply ran out of road and chose to close their businesses before the choice was taken away from them.”