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Record numbers of Scottish firms collapsing

Category: Scotland Business News — Gary Cain on April 28, 2012

Official figures have shown that record numbers of Scottish businesses are failing, either through becoming insolvent or entering receivership

Information released by Accountant in Bankruptcy (AiB) has shown that 385 businesses entered receivership or went into insolvency, representing a 37.5% increase on the final quarter of 2011.

The number is also up by nearly 31% from last year during the same time period and this means that an average of nearly thirty companies are going bust a week throughout Scotland.

PKF has said the numbers are the highest that have ever been recorded.

With news this week that the UK had fallen back into recession, the findings reflect what a gloomy outlook there is for many. With loan facilities still proving hard to come by, such companies are electing to shut down their operations rather than struggle on.

Those that are continuing, often do so through increasingly risky strategies. Discussing the findings by AiB, corporate recovery partner at PKF Bryan Jackson said:

“There will undoubtedly be businesses which have used up years of cash reserves to stay afloat but have now found they are unable to carry on due to the relentless lack of an upturn in the economy.

Instead of risking the use of liquid assets, companies can still move forward by unlocking cash flow through asset based lending, such as invoice factoring.

By taking such measures, many businesses have been able to navigate the downturn successfully. Many are now also able to take advantage of failing companies in their sector, either through increased market share, or acquisition of preferential terms.

'Disclaimer: The information contained in these articles is of a general nature and no assurance of accuracy can be given. It is not a substitute for specific professional advice in your own circumstances. No action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a consequence of the material can be accepted by the authors or the firm.

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