As we enter the second half of 2024, we’re beginning to see some trends hardening as they follow a consistent pattern.
The latest set of corporate insolvency statistics from The Insolvency Service for July underlines that while month on month business insolvencies for the UK may have reduced, the medium and longer term trends and increases in certain insolvency procedures continue to rise.
This underlines that the current economic situation, while improving, will take more months to stabilise and see business insolvencies decrease consistently.
In Scotland last month there were 117 company insolvencies recorded.
This was 21% higher than the number seen in July 2023 and an increase of eight from last month.
This total consisted of 76 CVLs (up from 60 in June); 33 compulsory liquidations (down from 33) and eight administrations (up from six).
There were no CVAs or receivership appointments recorded.
Historically, compulsory liquidations have been the most frequent type of company insolvency in Scotland. Since April 2020 however, the number of CVLs have remained higher than numbers of compulsory liquidations.
This ongoing trend shows that Scottish directors and their accountants are being more proactive and taking difficult decisions earlier rather than relying on their creditors to take action and force the closure of their companies.
The total insolvency rate in Scotland for the 12 months up to and including July 2024 was 53.8 per 10,000 companies on the effective register. This was up slightly (0.7) on the preceding 12 months.
The Circular Economy Bill will cause many directors to rethink their operations
Richard Bathgate, President of R3, the insolvency and restructuring trade body, in Scotland said: “Despite the economic improvements and business confidence holding strong throughout the last quarter, the picture is still a challenging one for businesses in Scotland.
“The UK General Election introduced an element of uncertainty for businesses which has impacted the positive mood among businesses, and a further uptick in confidence will rely heavily on summer spending and activity, particularly during big events such as the Edinburgh Fringe Festival, and the Highland Games, which are crucial for sectors like hospitality, retail and tourism.
“With the passing of the Circular Economy Bill, many directors will also be rethinking how their businesses operate this year.
“Food and hospitality services in particular will need to consider the impact of charges on single-use items like disposable cups and food containers, whether this will mean increasing prices or investing in reusable alternatives. These changes will need careful planning to manage costs effectively.
“Manufacturers and retailers will also need to adapt to new restrictions on unsold goods, potentially reducing their stock levels or exploring secondary markets.
“While these changes may present challenges, especially for businesses already facing financial difficulties, seeking professional advice early can help navigate the new regulations.”
With Autumn on the horizon, many businesses will be thinking about what the rest of 2024 holds for them and if a busy next few months might be the key to making it a good one.
But what if you could do something, right now, that would increase those chances?
Well you can! Get in touch with us today and arrange a free initial consultation at a convenient time for you.
You’ll work with one of our advisors and when they get a clearer picture of your business and its financial picture, they’ll be able to give you a full rundown of your viable options and what you can do to implement them.
If you act now then you’ll be able to see results before the leaves fall from the trees.