CORPORATE insolvency numbers (liquidations and receiverships) in Scotland for Q2 2023-2024 increased by 4.8% compared with Q2 2022-2023, to a total of 283.
Corporate insolvency numbers in Scotland also increased by 19.9% when compared to pre-pandemic levels in 2019.
The number of corporate insolvencies (liquidations and receiverships) in Scotland for Q2 2023-2024 decreased by 3.1% compared with the previous quarter’s total of 292 (April-June 2023).
Overall, personal insolvency numbers (bankruptcies and protected trust deeds) in Scotland for Q2 2023-2024 saw no real change, a decrease of just 0.05% which equates to a single case, compared with Q2 2022-2023, to a total of 2,074.
Personal insolvency numbers in Scotland also decreased by 40.2% when compared to pre-pandemic levels in 2019.
The number of personal insolvencies (bankruptcies and protected trust deeds) in Scotland for Q2 2023-2024 decreased by 1.3% compared to the previous quarter’s total of 2,102 (April-June 2023).
Commenting on these Scottish insolvency statistics), Iain Fraser, Chair of the Scottish Technical Committee at R3, the UK’s insolvency and restructuring trade body, said:
“The year-on-year rise in corporate insolvencies has been driven by an almost 35% rise in compulsory liquidations. This increase suggests that, faced with financial challenges of their own, more and more creditors are now increasing their efforts to pursue debts they are owed to meet their own financial obligations.
“Times remain tough for Scottish businesses. Inflation is still a big worry for many. Prices are going up, and businesses are struggling to reasonably pass on these extra costs to customers. As we head into the colder months and energy bills rise, these increased costs are only set to exacerbate current challenges, particularly for higher risk sectors like hospitality and retail.
“Businesses have faced the dilemma of whether to increase prices to compensate for their falling margins, or whether to absorb these expenses themselves in an attempt to retain customers. For some, further increases could be enough to see them entering an insolvency process to resolve their financial issues, while others may hold on in the hope things will improve.
“Business owners are also feeling the squeeze from the recent rise in the corporate tax rate to 25%. With a higher tax burden, profitability takes a hit and less money is left to invest in growth or put away for more challenging times – both of which add unwelcome additional pressure.
“One positive over the last three months has been the economic boost brought about by the Edinburgh Fringe Festival. With more tourists, and even Scots choosing to stay close to home for the summer holidays, local businesses saw a much-needed lift and hopefully this will be mirrored over the next quarter as we move towards Christmas, with more people deciding to shop and spend money locally.
“If you’re a business owner or director, and you’re starting to see the signs of financial distress, like rising stock, cash flow problems, or mounting late payments, don’t wait to seek advice. Allowing these issues to build up will only add to the problem and could potentially lead to more serious hardships down the road.
“By seeking advice from a qualified professional at the earliest point, you’ll have more time to consider your next steps and a much better chance of finding a solution to your concerns than if you’d waited until the problem worsened.
“Turning to personal insolvency, the numbers have held steady compared to Q2 last year, indicating that people in Scotland are still facing financial difficulties due to the high cost of living.
“Personal insolvency levels have fallen since before the pandemic, driven by a fall in both bankruptcies and protected trust deeds, so while there has been some improvement since the pandemic’s peak, the economic impact remains considerable.
“Inflation and rising interest rates continue to bite Scottish households. High costs across the board, from mortgage prices to energy bills mean making it through the month without relying on forms of credit is getting harder and harder, while the cost of food remains a major concern for many.
“As we move into Q3, there’s a growing worry that more families will face the difficult choice between heating their homes and putting food on the table – a position no one wants to be in.
“For those renting, there is some relief as the rent cap has been extended for an extra six months. This news comes as a welcome respite for those already struggling with high everyday costs and will hopefully ease some concerns about having to manage the added burden of increased rent on top of already stretched budgets.
“The recently announced freeze on council tax will also provide some financial relief, but as this comes into effect next year, the impact of these measures might not be felt for another six months or more.
“If you’re struggling with your finances, my message is simple: seek advice as early as you possibly can. Money worries are one of the hardest things you can go through – whether you’re a business owner or an individual – but acting early on your concerns will not only give you better peace of mind, but more potential options and more time to take a decision on how you move forward than if you’d waited for the problems to mount.”