While the recession has already taken its haul of business-failures in the south west, the autumn will bring a second wave of collapses, according to an insolvency expert.
Jerry O’Sullivan, head of business recovery services at accountancy firm Bishop Fleming, said: “While the most exposed companies have already succumbed to the pressures of this intense recession, the autumn will see a second wave of collapses.
“A number of vulnerable businesses have been slashing costs by redundancies, operational cuts, and grabbing the Government’s offer of delaying payments for such taxes as PAYE, VAT, and Corporation Tax.
“That six months tax-holiday already amounts to £billions of delayed payments, and will soon expire, leaving many businesses exposed to urgent demands from the taxman,” warned O’Sullivan.
Many south west businesses have taken advantage of the Government’s tax-holiday, but now face the end of that holiday – and the need to pay-up.
According to O’Sullivan, any business exposed to “discretionary expenditure” could be in that second-wave of autumn failures, including companies in the tourism, retail, and automotive sectors.
He said: “Many commercial property companies will also be forced to seek refinancing arrangements in the autumn, at a time when rents are not flowing in so well. So these companies, too, might swell that second wave of failures.”
He also predicts a third-wave of business failures next year, when the property market picks up, and banks decide to ‘pull the rug’ on ailing companies when they see the opportunity to get better prices for properties used as collateral
“That third wave will also be swelled by companies that, without sufficient working capital, start to overtrade as the recovery begins. So, despite the news media’s hunger for signs of ‘green shoots’, this is the moment for companies to engage recovery advice, rather than become yet another statistic,” O’Sullivan added.
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