Brett Barton
Brett's recent articles
- A New Dawn for the Company Voluntary Arrangement (CVA)
13th November - Is there a future for charities?
17th September - Tougher Measures For Directors
20th August
What's happening on the front line?
28th May 2008 09:02
Yesterday I received a call from BBC Coventry & Warwickshire Radio asking me to talk with Malcolm Boydon on the breakfast show and provide the listeners with how Coventry is coping with the credit crunch, particularly as a local removals company was facing difficult times and making redundancies.
I thought it quite timely to provide our blog readers with an update from the Cranfield Business Recovery perspective. This comes at a time where the latest insolvency figures released by The Insolvency Service show corporate insolvency for the first quarter of 2008 has increased by 14% compared with the last quarter of 2007 and 11% on the same quarter three months in 2007.
A review of the insolvency notices published in the Coventry Telegraph in the last eight weeks indicates that sectors such as local pubs/bars, transport and retail are struggling. Certainly from the insolvent companies that Cranfield have dealt with in the last eight weeks, I would agree that transport, retail and construction are starting to show real signs of distress.
The reasons why have been widely reported including:
• Increasing cost of petrol/diesel and the forthcoming increase of 2p per litre in October.
• The retrospective increases in Vehicle Excise Duty (VED) to all new vehicles purchased since March 2001, with the top band now being £400 per year.
• Significant increase in energy costs for electric and gas.
• Inflation (CPI or consumer price index) has risen to 3%, mainly due to increases in food and energy costs.
I believe that the economy is going through a period of distress as companies fight to stay in business and beat the economic pressures that they face. This could be by prudent planning, rationalisation of costs, diversification or any other measures needed to help maintain a good level of profitability. However, if the market conditions worsen, companies may not be able to continue to survive and could be facing a period of default.
The best advice we can give to directors is to get early advice, either from your accountant or Cranfield Business Recovery. Taking this step maximises the options available and will give companies the best chance of potentially avoiding an insolvency scenario.
