THE promise of a long hot summer might be great for holiday makers but not so great for struggling businesses.
Leading Sheffield insolvency expert Paul Moorhead points out that whilst many people are enjoying the lazy days of summer, businesses often begin to feel the strain as the days grow longer.
And with the latest statistics highlighting an increase in the number of companies going into liquidation of over six per cent, the indications are that the commercial sector could be facing a time of renewed upheaval.
“These figures suggest an increasing number of business owners are deeply concerned about the viability of their companies,” said Paul, of Sheffield insolvency and business turnaround specialists Graywoods.
“And with that concern comes a lack of confidence that is extremely harmful to the economy.”
That uncertainty, Paul added, came even though many analysts would describe the current business climate as relatively benign.
“Interest rates are still low and the continuing weakness of the pound is likely to be helping exporters,” he said.
“But there is the spectre of rising interest rates and that weak sterling which is helpful in one area unfortunately brings with it a threat of inflation.
“And at the same time, the ongoing uncertainly over Brexit negotiations is creating further uncertainty.
“Business owners like to be able to see the horizon and know what’s going to happen in both the immediate and long term future and that’s not really possible right now.”
Added to all that, he continued, was the fact that summer often sees economic activity decrease.
“The problem is pretty much the same one that businesses face at Christmas, that other time when everybody is supposed to be enjoying themselves,” Paul said.
“Some companies use the summer holiday period as an excuse not to pay suppliers and contractors on time, which can have a major impact on companies already struggling with cash flow problems.
“It’s also a time of year when production slows down in many sectors because people are away and things don’t move forward as quickly as they should.
“In addition, customers may be ordering less to boost their own cash flow and improve their financial position.”
The best response, Paul added, was not to pack the problem away and hope things will improve with the end of the holidays.
“Don’t let a summer holiday time cash flow crisis become an autumn disaster,” he said.
“As ever, the quicker you seek a solution to a business problem, the more likely there is to be a successful outcome.”
For further information visit www.graywoods.co.uk
