More than third of all Scottish companies were thought to be at a “higher than usual” risk of entering a position of insolvency during December of last year.
That news could come as a surprise and represent a real cause for concern for people living across the country, with an unsettled economy generally being taken as the key reason why so many firms are finding it tough to maintain sustainable profitability.
Although some 33.8 per cent of all Scottish companies are reckoned to have had an elevated risk of insolvency in the final few weeks of 2019, the figure for the UK as a whole was considerably higher at 41.2 per cent.
The figures have been compiled by the Association of Business Recovery Professionals, otherwise referred to as R3, which has said that companies across all industries are suffering cash flow issues as a result of dampened consumer and business spending.
R3 describes the transport and construction sectors as being “notoriously volatile” but notes that Scotland’s businesses in those parts of the economy are generally outperforming their counterparts elsewhere in the UK, at least as far as their financial resilience is concerned.
However, according to R3’s latest figures, Scotland’s manufacturing companies have a relatively high risk of insolvency compared to those in the same sector but elsewhere in the UK.
“Having one in three Scottish-registered companies at above-average risk of insolvency is a stark reminder that it’s tough out there for a number of businesses,” said Tim Cooper, chair of R3 in Scotland.
“Although overall levels of elevated risk are lower than in other parts of the UK – Scottish enterprises need to be aware of the potential hazards out there,” he added.
Mr Cooper went on to say that the result of last month’s general election might help alleviate some of the uncertainty that has gripped the British economy in recent months.
Speaking generally, he said: “Directors and business owners should keep a very close eye on cashflow, and be prepared to seek professional, reputable advice if a problem looks like it might snowball into something more serious.”
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