THE number of Yorkshire firms in financial distress has increased, says a survey.
Figures from insolvency firm Begbies Traynor show that 11,576 businesses in the region faced “significant” or “critical” business problems during the first quarter of 2011 – the latest figures available.
That’s 17% up on the same time last year when the total stood at 9,906.
The firm’s quarterly Red Flag Alert statistics showed that levels of business distress in Yorkshire and Humber have increased even faster than the UK average year-on-year figure of 15%.
Across the UK, 186,000 companies are facing significant or critical financial problems.
Companies with significant problems are those facing court action and with poor, very poor, insolvent or those with out of date accounts.
Those with critical problems are those with county court judgements totalling £5,000 or more or facing wind-up petitions or related actions.
Julian Pitts, of Begbies Traynor, said: “Following last quarter’s numbers – showing that Yorkshire remains one of the most distressed areas of the UK – these numbers are unwelcome, although not altogether unexpected.
His colleague David Wilson said: “The figures show the impact of seasonal trends. Retail and hospitality businesses are most likely to fail in the first quarter of any year, but that doesn’t account for all of the increases.
“We are seeing a worrying spread of distress across a great number of business sectors with business-to-business support and professional services particularly hard hit.
“Nationally, more than 15,000 firms in the professional services sector are showing signs of significant or critical problems – partly driven by a stale property and corporate deals market – often the drivers for an active professional services community.”
Mr Wilson said firms which operate with a high fixed cost base were finding the current market conditions increasingly difficult as their revenues failed to recover and the scope for further cost reductions became more limited.
Business-to-business support services were hardest hit by significant problems, accounting for 22% of the businesses in distress in the region. Construction accounted for 18% of the total with property services making up 8%.
Mr Pitts added: “High levels of legal actions taken against debtors indicate that creditors are attempting to maximise cash collection right across their customer base.
“The hike in oil prices and January’s VAT increase has made cash flow and credit control essential priorities for most businesses with some seeking payments through the courts.”