During the Covid pandemic, surprisingly few companies went into administration. This was because a raft of government support measures, such as furlough and bounce-back loans, allowed struggling companies to survive.
But this is over, now, and it’s showing, with new issues adding to the effect. The number of companies entering administration in March 2023 was the highest for three years.
The Covid Effect on Administrations
Considering the devastating effect the Covid pandemic and successive lockdowns had on industry, it would be easy to assume that companies were entering administration in droves during that time. In fact, the opposite was true — administration numbers fell to record lows.
As I’ve already mentioned, this was due to the measures offered by the government to prop up SMEs during the crisis. There’s no denying that it saved many small businesses that were simply unfortunate.
However, it also had the effect of propping up businesses that were already failing — and, with the end of that support, many of these are finally entering administration. At the same time, other SMEs that were battered by the pandemic have now been further hit by the difficult times we’re facing now.
Soaring Administrations in 2023
The figure for companies entering administration in March hit 130, while for the whole first quarter of 2023, the number was 288. Both represent the highest figure since the start of the pandemic, but it’s notable that the March figure isn’t very much less than January and February put together.
The past year has been hard for both individuals and SMEs, with the combination of energy prices going sky-high, combined with soaring inflation caused by the war in Ukraine and the after-effects of Brexit, among other factors.
Many companies with Covid loans, even those that took them in complete good faith, are now finding it difficult to meet the repayments. Figures show that, in February, 7% were in arrears and 3.8% had defaulted, while in another 3% of cases the lenders had claimed funds from the government’s guarantee scheme.
How Might This Affect You?
It’s possible, of course, that you may be one of the SME owners who are struggling, through no fault of your own. In this case, it’s vital to make sure you’re getting all the income due to you. I’ll help you with this, and if you’re still facing the risk of administration, I can put you in touch with a choice of excellent insolvency practitioners, who can work with you to find a way out.
On the other hand, if one or more of your customers are facing this situation, your own cashflow could be hit if they do end up going into administration. That’s why it’s worth contacting me well in advance of any debt becoming critical, so that we can work with your customer to find a solution that will benefit both sides.
Whichever applies to you, give me a call to find out how I can help you get the cash flowing as it needs to.