Quarterly insolvency data

From our vantage in our tiny corner of the economy, we feel the UK’s economic prospects are in the doldrums. The Bank of England’s promise of a 2% inflation rate has now shifted to early 2025, demonstrating to mere non-economic-expert mortals that all attempts to control inflation are seemingly ineffective. I’ve put in a huge amount of effort to building cash reserves to counteract an increase in late payments, to keep cash flowing. We have been in a torpor of a wage spiral, which is slowing down now and gives a glimmer of hope, but with the High Street continuing to implode - with Wilko’s demise being the latest big shock - I feel that we will need to be resting in these doldrums for 2024 as well.

This data makes for bleak reading. Businesses face countless challenges in the current economic climate but cash flow is the biggest concern for most right now. Reflecting that, over the past six months, more SMEs have been turning to finance solutions that ease pressure and give them the financial headroom they need. Whether that's refinancing existing assets in the businesses or releasing working capital from unpaid invoices, cash is absolutely key right now. However, there is reason for hope on the horizon. With anticipation, we await the Autumn Statement, which we hope will bring announcements of further relief for businesses and pave the way for stability, certainty and optimism in the new year.

In this turbulent climate, the concept of trickle-down economics has taken on a new meaning for many businesses. Cashflow is both the problem and the solution. High prices and rising interest rates have taken their toll prompting consumers to tighten their belts or delay making purchases. Consequently, many businesses are resorting to dipping into tax savings to keep afloat. Meanwhile, extended lead times for invoice settlements are pushing operating capital to its breaking point, culminating in a perfect storm of unprecedented challenges. It remains to be seen how lenient HMRC will be in this environment. Taking aggressive action at this stage is unlikely to result in better revenues for the Treasury, and may be the final nail in the coffin for many.