From analysis recently
produced by KPMG, it has been shown that there was a large rise in the number
of companies entering administration in England and Wales during the fourth quarter of 2018.
According to notices in the
London Gazette, there were 368
companies that fell into administration between October and December 2018 – a rise
of 14% on the 322 companies going
into administration during the previous quarter, as well as a huge increase on
the 277 administrations that saw a
similar fate during the same period in 2017.
Retailers and casual dining
chains have frequently appeared in the headlines in recent weeks, due to
various high-profile insolvencies coming to the forefront. They continue to fight
to keep pace with changing consumer habits, reduced consumer confidence, and
increasing cost pressures.
U.K. fashion chain L.K.
Bennett, a favourite retailer of Kate Middleton, the Duchess of Cambridge,
collapsed into insolvency earlier this month, causing 55 layoffs and threatening 500
more jobs, showing that all businesses are at risk.
Another major high street retailer, Debenhams, has already announced store closures and is in restructuring talks on its debt and could also move into administration if a solution is not found. Even John Lewis communicated that its full year profits would be “substantially lower” because of slower growth, margin pressure and higher costs. With half profits dropping 99% to £1.2m, the retail giant said it might be forced to suspend its annual staff profit share for the first time since 1953.
With further political and
economic jitters due to the uncertain outcome of Brexit with parliament voting on
both a no-deal hard Brexit or extension, many businesses are acting extremely
cautiously with regards to investment.
This backdrop of slower growth, uncertainty, and potential of reduced market liquidity places a huge importance for all businesses to review their current and future financial positions. Businesses, however small or large, need to have visibility of what lies ahead so they can take action against future financial shocks.
At Shelley Capital Management,
we assist all our clients with ongoing accounting services and finance
reporting solutions, including:
12 month cash flow forecasting
12 month budgeting of income and expenses
Timely monthly management reporting with comparison to budgets
Advice and solutions for cash flow pressures, including external funding options
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