Administration numbers are on the rise, according to a Q3 2023 report from Kroll. With the construction, manufacturing and food and drink industries most at risk, our business recovery and insolvency specialists share the report’s key findings and offer their advice for business owners.

A recent report by financial advisory firm Kroll has revealed troubling statistics surrounding company Administrations in 2023:

  • 955 Administrations filed in 2023 so far (only 40 less than the total administrations for 2022)
  • 337 companies entered Administration in Q3 2023, a 30% increase on Q3 2022
  • Construction and manufacturing industries are most at risk, with 127 and 111 Administrations respectively this year
  • The food and drink industry is also at risk, having experienced a 83.6% increase in Administrations during Q3 2023 compared to the same quarter last year

With Administration numbers increasing, it is imperative that Directors remain alert and watchful for early warning signs of financial distress in your own business, which is often highlighted by a lack of available cash flow to fund trade.

Early warning signs of financial problems in your business

  • Cash flow problems – Issues surrounding cash flow, such as struggling to pay your suppliers, low profit margins and a significant cash deficit, are a clear indicator that your business could be experiencing financial distress.
  • Sudden increases in debt or difficulties meeting repayment commitments – If you have found yourself needing to borrow more money in recent months or you are struggling to pay off your existing debts, you are likely experiencing cash flow problems and have a lack of funding to cover your business’ day-to-day operational costs.
  • Changing customer behaviour – If you are experiencing lower demand for your services, your sales are decreasing or you are receiving more complaints, this may result in future financial difficulties.
  • Changes to the market and regulations – Market changes, forces and amendments to regulatory obligations can increase your chances of insolvency, even though these external factors are beyond your control.

Dean Nelson, Business Recovery and Insolvency Partner at PKF Smith Cooper, commented: “In these current uncertain economic times, Directors need to have visibility on and monitor closely the company’s financial performance and have sufficient cash to fund day to day operations.

“Unfortunately I am seeing many businesses with legacy debt, as a consequence of difficult trading conditions during Covid, and this is currently having an effect on being able to fund ongoing trade, where the order book is now healthy, resulting in working capital problems restricting growth and prosperity, and diminishing the company’s margins.

“If you are experiencing cash flow difficulties, and the ability to fund growth, please contact PKF Smith Cooper for advice. The earlier you seek specialist support, the more recovery options you will have available to you.”

Dean Nelson, Business Recovery and Insolvency Partner

Rescue and recovery services from PKF Smith Cooper

Get in touch with us today to book your free consultation meeting with one of our business recovery and insolvency experts. With our tailored advice and support, you can find out more about your company’s options for the future.