Signs of business distress heightened in last quarter of 2010

R3’s second quarterly ‘Business Distress Index’, a barometer of financial distress, reveals increased signs of distress in December last year, with ‘decreased profits’ being the leading sign. R3, the insolvency trade body, surveyed over 500 business owners, 54% of whom recorded decreased profits, an increase of 5% from September.

The index also reveals a 4% jump in the number of businesses making redundancies and a 3% increase in those introducing pay cuts or freezes. The findings also show an increase in the number of businesses finding it difficult to pay invoices on time, which now stands at 268,000, the equivalent of one in six.

R3’s President Steven Law commented: “The overall picture indicates that conditions have got more challenging from September to December last year – though we must remember that during this period businesses were affected by the adverse weather conditions. However, the increase in businesses struggling to pay bills on time is worrying as this is the technical definition of insolvency.”

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