Professional services sector struggling financially
Begbies Traynor's Red Flag report highlights 15,526 professional services firms in financial distress
THE PROFESSIONAL SERVICE SECTOR has seen a 61% increase in financially distressed firms in the last year, according to Begbies Traynor‘s Red Flag report.
The findings indicate firms experiencing “significant” or “critical” financial problems increased 61% in the first quarter of 2011 to 15,526, compared to the same period last year of 9,620.
Ric Traynor, (pictured) executive chairman of Begbies Traynor, said: “Over 15,000 firms in the professional services sector are showing signs of significant or critical problems – partly driven by a stale property and corporate deals market – often the drivers for an active professional services community.
“Compared with the Q1 2010 figure of 9,620 it seems that firms which operate with a high fixed cost base are finding the current market conditions increasingly difficult as their revenues fail to recover and the scope for further cost reductions becomes more limited.”
Other sectors hit hard include bars and restaurants which saw an increase of 68% over the last year and leisure & culture which rose 60%.
The Red Flag report monitors businesses experiences financial difficulties and categorises them into two groups, critical and significant.
Significant problems include companies that have either a court action and or poor, insolvent or out of date accounts. Critical businesses are businesses which have county court judgements (totalling more than £5,000) and or winding up petitions.