The final corporate insolvency statistics for 2023 saw 26,608 businesses in an insolvency procedure, a 14% increase on the previous year and nearly as many as the whole of 2020 and 2021’s totals combined. 

511 businesses a week on average are going into liquidation, administration, a CVA or other procedure and with the current economic headwinds continuing to blow, they show no signs of reducing in 2024. 

In fact, January’s total of 1,769 was the highest total for that month in over five years.

Headwinds include inflation still double the Bank of England’s target and holding steady last month; interest rates still at decade highs, rising energy costs, supply chain disruptions due to internal and external factors and likely increases in costs that we don’t know about in the forthcoming Budget, along with the ones we do know about already.

Many small and medium sized businesses are already facing increased financial strain but they have an advantage over larger companies that they can tap into quicker and find some potentially game-changing solutions – their accountants. 

Rightly acknowledged for their skills and expertise at effectively managing cash flow and other financial duties, accounting professionals are frequently overlooked when it comes to spotting potential financial trouble early. 

They have a unique capability to assist their clients in preventing or helping navigate through business-critical incidents and recovery. They can use real-time accounting and banking information to build reliable models that can predict critical milestones before they are reached  

Being able to identify clear warning signs such as declining revenue, increasing debt and cash flow problems is vital as is their knowledge and experience when helping their clients engage with insolvency professionals (IPs) at an early stage while decisions and changes can still be made. 

Encouraging them to get advice and help from IPs will not only give them additional time but reassure them that this is not necessarily a terminal process for the business but a range of specific processes and options to help the business depending on its financial position. 

Other ways accountants can help their SME clients 

Funding, grants and finance

Accountants can frequently spot and recommend additional funding sources for their clients such as grants, loans and other targeted resources that only SMEs could be eligible for. They can also use their contacts and knowledge to find specific grants based on their circumstances such as broadband voucher schemes or grants for purchasing low emission vehicles. Accountants can also fully explore tax benefits available such as R&D credits or other appropriate and available deductions and arrangements. 

Debt Management

Professional accounting specialists have an advantage when it comes to finding and suggesting solutions for rising debts.  They will be able to find and recommend services from individuals, organisations or even lenders that will be able to offset or reduce the total debt load on a business. 

They will be able to offer their own professional opinion to their clients and suggest likely courses of action as well as the likelihood of success for any actions the client suggests or would like to pursue. 

With their professional backgrounds they might also be able to introduce their clients to their Local Enterprise Partnership or other organisations such as the British Chambers of Commerce, Federation of Small Business.

We love working with accountants on cases because their clients already trust them implicitly and they know what insolvency involves and prefer to work with professionals like themselves. 

It’s one of the reasons why we built our new Accountants Hub – so they will have access to all the details they will need about specific insolvency processes if their clients ask and they don’t immediately have the answers at hand. 

If any of your clients are in or entering the danger zone, please feel free to get in touch with us yourself. We’ll be more than happy to talk through scenarios and solutions with you initially and can explain them to your clients in a free initial consultation with them subsequently. 

If dark economic clouds continue to gather throughout 2024, know you’re not alone in looking out for your clients.