The number of Preston-based companies facing significant financial problems rose in the second quarter of 2015, the latest Red Flag Alert report from Begbies Traynor has found.
The research indicates that the number of companies with significant financial issues rose by 15 per cent between April and June, with 1,186 firms now in difficulties compared with 1,030 in the first quarter of the year.
One contributing factor is an increase in late payments, which is putting pressure on businesses cash flow and leaving them susceptible to risk if any unexpected issues arise.David Acland
Construction saw an 11 per cent rise in the number of firms facing significant problems, as rising input costs and a shortage of skilled labour put pressure on firms.
Despite low inflation and interest rates leading to an increase in disposable income, retailers also continued to struggle in the second quarter of 2015, with a 12 per cent rise in the number of Preston-based firms experiencing significant issues. The leisure and tourism industry also had a difficult three months, with 18 per cent more bars and restaurants, 14 per cent more leisure and culture firms and 13 per cent more hotel and accommodation businesses facing significant problems.
David Acland, partner at Begbies Traynor in Preston, said: “Despite the economy continuing to stabilise many firms struggled during the last quarter, with a majority of sectors seeing a rise in the number of firms experiencing financial difficulties.
“One contributing factor is an increase in late payments, which is putting pressure on businesses cash flow and leaving them susceptible to risk if any unexpected issues arise.
“Over trading also continues to be a problem, as firms seize a range of new opportunities but are unable to fulfil due to lack of available resource.”