UK SMEs are showing growing reluctance to take on new debt amid rising financial distress among businesses. Research by the British Business Bank indicates less than half accessed finance last year. Over 650,000 businesses ended 2022 in significant financial distress, with critical cases surging 50% in a year. Industry experts recommend proactive measures to address cash flow issues, highlighting that available funding for distressed businesses often comes at a higher cost. Strategies include refinancing and asset liquidation, but timing is crucial due to market volatility.
For some companies, however, it may be too late to rein in borrowing. New data from Begbies Traynor's "red flag" study shows that more than 650,000 businesses ended last year in significant financial distress - a marked increase on 12 months earlier.
David Hopkins, a restructuring and turnaround partner at Begbies in Manchester, warns that business owners should act quickly if they spot trouble ahead. "Delays in customer payments or project starts can cause cashflow issues months later.... the problems remain. Head-in-the-sand is never the right approach."
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