The number of UK firms worried about insolvency has fallen, despite recent figures that show liquidations hit a four-year high in May.
According to research from business advisory firm Evelyn Partners, 32% of UK businesses believe there is a risk they will become insolvent in the next 12 months, down on the 47% of firms that thought there was a risk of collapse in September 2022.
The latest official Insolvency Service figures show a 40% hike in insolvencies year on year, with over 2,500 firms declared insolvent in May. Some 99 per cent of these firms had revenue of less than £1m.
In contrast, the 500 business owners surveyed by Evelyn Partners had revenue of over £5m, pointing to a stronger outlook for medium-sized businesses.
Claire Burden, partner at Evelyn Partners, said “the size of the business is a factor” in explaining the difference. “A lot of the liquidations at the moment are very small and many haven’t been trading for a while,” she said.
The research also found that the number of firms expecting to make redundancies dropped from 52% in September 2022 to 36% in May.
“Emerging out of these challenging months, it is encouraging that business confidence remains stable, and survival prospects have improved as we head into the summer,” Burden said.
However, 29% of firms said they faced difficulties raising funding. Burden said that while funding from traditional banks is available, there were fairly “high hurdles” to accessing funds, particularly for loss-making companies. “Owners are going to alternative sources of funding for working capital funding for example,” she said.
Traditional bank lending will make up just 12% of total capital UK businesses are hoping to raise in the next six months, the research showed.
“Emerging out of these challenging months, it is encouraging that business confidence remains stable, and survival prospects have improved as we head into the summer.
Claire Burden, Partner, Evelyn Partners.
