Latest figures from Accountant in Bankruptcy (AiB) has shown that business insolvencies in Scotland rose 19.9% in Quarter 2 (Q2) 2023-2024 when compared to pre-pandemic levels in 2019 and rose by 4.8% compared to the same period last year.
Business insolvency numbers (liquidations and receiverships) increased by 4.8% compared with Q2 2022-2023, to a total of 283, the business insolvency numbers in Scotland also increased by 19.9% when compared to pre-pandemic levels in 2019.
The number of business insolvencies (liquidations and receiverships) in Scotland for decreased by 3.1% compared with the previous quarter’s total of 292 (April-June 2023).
Iain Fraser, Chair of the Scottish Technical Committee at R3, the UK’s insolvency and restructuring trade body, said “The year-on-year rise in corporate insolvencies has been driven by an almost 35% rise in compulsory liquidations. This increase suggests that, faced with financial challenges of their own, more and more creditors are now increasing their efforts to pursue debts they are owed to meet their own financial obligations.”
“Times remain tough for Scottish businesses. Inflation is still a big worry for many. Prices are going up, and businesses are struggling to reasonably pass on these extra costs to customers. As we head into the colder months and energy bills rise, these increased costs are only set to exacerbate current challenges, particularly for higher risk sectors like hospitality and retail.”
“Businesses have faced the dilemma of whether to increase prices to compensate for their falling margins, or whether to absorb these expenses themselves in an attempt to retain customers. For some, further increases could be enough to see them entering an insolvency process to resolve their financial issues, while others may hold on in the hope things will improve.”
“Business owners are also feeling the squeeze from the recent rise in the corporate tax rate to 25%. With a higher tax burden, profitability takes a hit and less money is left to invest in growth or put away for more challenging times – both of which add unwelcome additional pressure.”
“If you’re a business owner or director, and you’re starting to see the signs of financial distress, like rising stock, cash flow problems, or mounting late payments, don’t wait to seek advice. Allowing these issues to build up will only add to the problem and could potentially lead to more serious hardships down the road.”