Member Article

High insolvency levels to continue "for three years"

Business failures will continue to rise over the next three years, Tenon Recovery has warned.

Figures released by the insolvency expert have revealed that the number of companies failing in 2009 has already exceeded last year’s figure by 19.1 per cent.

The company predicts that a further 5,800 businesses will become insolvent by the end of the year, ultimately resulting in a 57 per cent increase on 2008 levels.

Following the release of its annual results, Tenon’s chief executive Andy Raynor stated that the firm will continue to focus on its recovery arm because of increased demand for such services.

Other analysts have also predicted the number of accountancy jobs relating to insolvency could increase as a result of the downturn.

Carl Jackson, National Head of Tenon Recovery, said: “Business failures will continue to grow over the course of the next eighteen months and we are unlikely to see a significant reduction for another three years.

“Many distressed businesses have had a temporary reprieve from collapse because of the combination of low interest rates, a temporary reduction in VAT and low inflation levels, combined with the deferral of PAYE and Corporation Tax. Inevitably these will change, placing an increased strain on businesses, and those that have not planned wisely will fail.

“It is crucial that owner-managers take the opportunity to address key business issues while these circumstances remain. Regular forecasting and analysis of business performance, combined with expert advice and know-how, are vital in ensuring that entrepreneurs weather-proof their businesses in preparation for the cold winter months.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .