Knock On Effect Insolvencies Rise 13%

The demise of some major construction and retail firms in the past 12 months is having a significant knock on effect on businesses in the supply chain.  

According to recent research, underlying insolvencies that have come as a consequence of the insolvencies of major companies such as Carillion and Toys R Us have risen 13%. This shows that behind the headlines, many smaller businesses that relied on the work supplied by these companies have been pulled down into insolvency themselves.  

Studies have also shown that 26% or more than a quarter of businesses have suffered due to a major customer going insolvent.  

Insolvency often means that businesses are unable to pay debts with cashflow restricted and the pace of events can often be rapid, catching out business owners who are critically reliant upon the money they receive from a handful of clients.  

According to R3, the insolvency and restructuring trade body the financial impact of a client business going insolvent is described as having “very negative” outcomes for 10% of UK companies and “somewhat negative” for 16% of those business owners who took the survey.  

If you are a business owner concerned about insolvency, contact us today to see what we can do to help.