Business insolvency risk falls

For the first time in over a year and a half, there has been a “widespread” decrease in the proportion of businesses at elevated risk of insolvency in the West Midlands, new research reveals.

The October figures from by insolvency and restructuring body R3, show that ten of the 11 key business sectors in the region are showing an increase in their financial stability.

Only the tourism operator sector registered a decrease in overall stability levels, albeit a marginal one, with a 0.7% month on month rise in the proportion of businesses at above average risk of insolvency.

The West Midlands business sectors with the lowest insolvency risk levels are pubs (34%), restaurants (34.6%) and hotels (35%). Local sectors with the highest proportion of businesses at above normal risk of insolvency are professional services (51.3%) and technology & IT (50.3%).

R3 Midlands chair Chris Radford, a partner at the Birmingham office of Gateley, said: “This research should not be seen as definitive proof of a turnaround in business liquidity; it is more an indicator of a possible slowdown in heightened insolvency risk.

“We should be in no doubt that a large number of our region’s businesses are still facing strong challenges to their success, but this glimmer of positivity gives some hope for the future.

“In the meantime, it is vital for business owners to monitor company finances carefully and plan for all eventualities. If cash flow becomes a major challenge, professional advice should be taken at the earliest opportunity.”