Rise in Company Administrations Indicate Trouble Ahead for 2019
March 13, 2019 9:44 am

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

For more information on how we can help your business navigate through these uncertain times, please contact us.