Sharp rise in ‘problem’ firms

THE number of companies with “significant” financial problems has fallen in recent months, according to accountants at Begbies Traynor.

But there are still many more North West companies in this situation than there were last year. And the number of firms considered to be “critical” continues to rise.

Begbies’ Red Flag Alert report shows that 21,367 companies in the region were classed as having “significant problems” – late accounts or facing court action for unpaid bills – in the second quarter, up 34%.

Companies with “critical problems” – those with county court judgements totalling more than £5,000 or facing winding-up petition action – rose by 28% to 783.

But the number of firms with significant problems fell by 9% in June. The critical figure rose by 7% during the same period.

Begbies said the situation for businesses in the construction and professional services sectors had improved but conditions for those in recruitment, engineering and manufacturing contiuned to be tough.

David Moore, partner at Begbies Traynor in Liverpool said: “The economic forecasts remain gloomy and the recession will be a long drawn out affair. As yet we have not experienced the levels of insolvencies experienced during the last recession in the early ’90s.”