Companies falling into administration increased by almost 5% in 2019
Companies falling into administration increased by almost 5% in 2019

Companies falling into administration increased by almost 5% in 2019

Data from KPMG has found that there has been an increase in the number of companies falling into administration.

The multinational professional services business found that, in 2019, insolvencies increased by almost 5%.

It isn’t surprising that companies found the climate a tricky one to navigate given what Bill Nimmo, Head of Restructuring for KPMG UK, called “profound political and economic uncertainty.”

He said: “2019 was a year characterised by profound political and economic uncertainty, with consumer confidence remaining fragile and companies continuing to bear the brunt of rising overheads and increased costs.

“While many businesses battened down the financial hatches, adopting a prudent and cautious strategy, for some, the challenging trading conditions proved to be a bridge too far.”

In a study of notices found in the London Gazette, it was found that a total of 1,403 companies went into administration last year, compared to 1,341 in 2018.

A spike of insolvencies in the third quarter of the year are held up as the reason for the rise, when 420 firms entered administration.

The final three months of 2019 saw insolvencies fall back to the levels more typically associated with a quarter of any given year, with 311 administrations recorded between October and December.

Mr Nimmo said the decisive nature of the General Election brought “a degree of certainty,” and he encouraged companies to keep on top of their financial housekeeping.

He said: “It’s certainly not apparent that we are about to see an influx of insolvencies over the months ahead.

“December’s election result brought with it a degree of certainty, and business confidence seems to have responded positively.

“While certain sector-specific challenges remain, we would encourage companies to continue to focus on good financial housekeeping.

“Keep a tight grip on cash and costs, focus on operational efficiencies and maintain a clear visibility over supply chains, where events that are out of your control can have a significant knock-on impact on your business.”

Confidence has improved since the election, but it remains to be seen if this will be transferred to success in business.

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