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Scottish SMEs Confront Insolvency Spike

The number of smaller firms going into liquidation in Scotland has increased by almost a third so far in 2018.

Recent years have not been kind to small businesses in Scotland. The British business community has suffered through a multitude of big and small disasters; from localised incidents such as the fires in Sauchiehall Street in Glasgow to national catastrophes such as the collapse of Carillion. The construction giant fell apart back in January, taking a lot of small business confidence and finance with it. Consequent occurrences, from bad weather to Brexit, have merely added to the small business burden. A new report has now revealed small business financial distress has escalated dramatically as company liquidations have risen.

Professional services firm, KPMG, has released new insolvency data which has revealed a 32 per cent rise in SME liquidations, with 679 companies affected. This sharp upturn also had an inevitable impact on insolvencies, with the number of company insolvencies rising from 581 in 2017 to 721 in 2018. This uncomfortably illustrates the unstable landscape for small businesses, where low profits and Brexit uncertainty have left many to struggle to survive.

There has a small drop in the number of firms who went into administration in 2018, with business confidence in Scotland also among the highest in the UK, according to KPMG. However, the UK is far from a nurturing landscape for start-up and small enterprises. Business owners need to focus on their finances and cash flow if they are to ensure their own survival, as well as prosper within the questionable post-Brexit environment.

Mr Nimmo, the head of restructuring for KPMG in the UK, said: “In general terms, these businesses are perhaps a little more susceptible to problems due to a lack of balance sheet strength and liquidity, meaning problems can occur relatively quickly – especially if business planning and management information are also weak.

Here at the Credit Protection Association, many of our Members are small business owners from far across the UK. We have noted the qualms that many of them face and have proffered aid accordingly. The combined power of our debt recovery and credit monitoring services have provided both the financial power and the tools to protect it.

At CPA, our collection team chase down unpaid invoices, recovering even the oldest and long-lost debt. This has restored some financial power back to our Members, prompting many to explore expansion and growth opportunities. A cash injection is not the perfect cure for financial distress, however, and business owners must ensure they have the right safeguards in place to prevent late payers and even insolvency.

This is where CPA really comes into its own. Our Members champion our credit monitoring services, from credit reports and credit rating information to a company and directorship register and County Court data. These facilities allow our Members to keep a close eye on their customers, monitoring current financial activity as well as historical financial data to ensure their customers and suppliers will not lead them into another Carillion crisis.

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