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Brexit Eyed In UK SME Insolvency Rate

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The U.K. economy has proven resilient since the Brexit vote, but the latest round of SME failures could be a sign that small businesses aren’t as sturdy when it comes to surviving the matter.

Reports by SmallBusiness.co.uk last week explored the 760 small businesses that failed in Dec. 2016, according to recent research conducted by insolvency practitioner Hudson Weir. According to the report, 1,093 additional SMEs are slated to close in Jan. 2017, and 3,633 businesses failed in the third quarter of 2016.

Researchers found that 14.5 percent of the failed businesses in December landed in the retail and food and drink sectors, while construction has also been hit hard.

And while a slew of issues can cause a business to fail — from fraud to unrealistic planning, according to the outlet — it all boils down to poor cash flow management. And business failures tend to hit a company early on, with less than half of U.K. SMEs reaching their fifth birthday.

According to Hudson Weir’s Hasib Howlader, Brexit could be exacerbating the struggles of small businesses in the U.K.

Brexit is unlikely to bring good news for small businesses, and it seems now it’s just a question of how bad it’s going to be,” he told the outlet. “With more than 40 percent of small businesses struggling to survive beyond five years, even in a pre-Brexit climate, it’s now more important than ever for small businesses to be looking for warnings signs that their business may be unhealthy.”

“If cash flow is a problem and you can no longer pay your bills as they fall due, the earlier you speak to an insolvency practitioner the better.”

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