Azets: Scottish businesses are most likely to fail during the first six months of 2022

Analysis of a decade of corporate insolvencies statistics collated by the Scottish Government from 2011 – 2021 has revealed that businesses are most likely to fail during the first six months of the year.

Azets: Scottish businesses are most likely to fail during the first six months of 2022

Blair Milne, restructuring partner with Azets in Scotland

The data, which was collated by accountancy firm Azets, reveals that during the decade there were 4.22% more corporate insolvencies in Scotland during the first six months – or around 430 additional insolvencies during the decade.

Blair Milne, restructuring partner with Azets in Scotland, is encouraging businesses to review business plans, particularly given further Covid restrictions, labour shortages, increased costs for materials, fuel, staffing and utilities.

He said: “Historically, our analysis of the last decade shows that the number of corporate insolvencies increases slightly in the first six months of a year. As such, it is important that directors review now their current trading position and liquidity, check projected figures for the next 12 months and revisit the costs of any business loans.

“From January to June financial pressures rise significantly as bills from the preceding year start to accumulate in the first quarter. Those businesses already struggling with cash flow and working capital problems will therefore be under severe financial pressure by the summer, if not before.”

Blair Milne concluded: “Unfortunately, the ongoing Covid issues, operating restrictions, declining sales and waning consumer confidence are weighing heavily on many businesses, particularly in hospitality, retail, leisure and construction.

“The withdrawal of Furlough and various government-backed loans, including CBILS (Coronavirus Business Interruption Loan Scheme) and BBLS (Bounce Back Loan Scheme), together with repayments now becoming due on such loans, will compound the pressures on businesses. Directors concerned about cash flow and the trading position should seek advice promptly as early intervention can reduce the risk of closure and maximise the chances of preserving the business.”

Share icon
Share this article: