Increased numbers of firms to fail in 2012

Begbies Traynor is expecting increased numbers of firms to collapse next year.

Ric Traynor, executive chairman of the insolvency company, believes that low interest rates have prevented many business insolvencies from occurring this year that might have done otherwise.

“Low interest rates means there is less pressure on businesses and many have been able to limp on. But at some point they will face the inevitable,” he told The Telegraph as Begbies Traynor’s half-year results were reported.

Small and medium-sized businesses in the property, construction and retail industries in particular, may be most susceptible to failing next year. While professional and financial service providers are also under pressure, and suffering from cash flow difficulties as clients struggle to meet payments due.

The upcoming rent due day on 25 December, when rent will be paid three months in advance, will further tighten companies’ cash reserves.

The numbers of firms entering administration is predicted to remain at those seen in 2011, though it could rise by 15 per cent if the economy slips into another recession.

Begbies Traynor recorded a £400,000 fall in revenues to £29.4 million for the six months ending October. Its pre-tax profits jumped £300,000 to £3.4 million, however.

“We’re likely to be going into a double-dip recession next year,” Mr Traynor added.

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