CHRISTMAS could herald the start of a cash flow crisis for many firms, an insolvency expert has warned.
Peter Sargent, of rescue and recovery specialist Begbies Traynor, said the first few months of the new year were likely to be tough for companies.
The Meltham man said: “After the Christmas festivities, many businesses face a bleak New Year with a squeeze point as cash flow pressures build due to the disruption of trade over the holiday period, combined with large bills looming such as PAYE, NIC and VAT as well as the quarterly rent day fast approaching.
“Unfortunately, the first quarter of the year is a peak time for both personal insolvency and business failure.”
But he added: “Some directors insist on putting their head in the sand and trying to forget about their imminent outgoings, putting off their cash flow issues until after Christmas.
“However, when January arrives, they find that their problems have escalated and are now approaching crisis point, exacerbated by the usual start up lag in the New Year when orders tend to be poor and debtors slow to pay.”
Said Mr Sargent: “Having survived almost four years of downturn, many businesses have already used up their cash reserves and will struggle to survive these types of additional pressures.
“After many years of giving insolvency advice, I can’t stress too strongly how important it is for directors to seek professional help at the first signs of trouble when there will be more options open.
“Insolvency practitioners shouldn’t be seen as a last resort, they can work with firms to find solutions and help to move the business off the seasonal critical list before it becomes fatal”.
