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13 Apr 2011
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.
Further reading
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Significant problems include companies that have either a court action and or poor, insolvent or out of date accounts.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.
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Briefings
By looking at the reasons supplier statements became unfashionable, and the reasons why it is different today, this paper delves into the many benefits that can be obtained by automating the process.
Having a real and true view of your organisation’s current financial position, and having the right systems and processes in place, will ensure that you can make strong choices and are ready to capitalise on opportunities
AccountancyAgeInsight is a frequently updated resource centre for finance professionals, offering a free and easy-to-use digital library of briefings, white papers and other information resources. 
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Avoiding The Upswing Risk
As the economic news continues to improve, professional services companies are beginning, tentatively, to rebuild. But with prices still depressed and margins significantly smaller, business growth remains risky.
If companies are to avoid the surge in business failure that often occurs as an economy emerges from recession, there is a clear need to attain a far better handle on costs, resource utilisation and cash flow.
In most professional services organisations, information is owned and managed by a number of disparate groups; resource managers, project managers and finance teams are all fiercely protective of their information. The result is that the same piece of data – such as an employee’s time sheet - will be entered into several separate systems, often spreadsheets, by several people, often over several weeks.
And while each group may be using this data effectively, without a single, consolidated view the business cannot efficiently manage billing, control cash flow or maximise resource utilisation. More critically, an organisation can actually be undertaking work with the perception of overall profitability, because each project is profitable, when due to underutilisation of resource across the entire organisation, the whole company is actually making a loss.
In this low margin economy, a lack of automated tools to integrate all operational, administrative and financial functions is adding significant business risk. It is those professional services companies that have immediate, trusted visibility of billing and cash flow, as well as resource utilisation and project costs, that can reduce the risk associated with growth and build a successful, profitable business.
Mike Risley
Commercial Director
Nolan Business Solutions
Posted by: Mike Risley, 13 Apr 2011 | 14:42
Time for action
Maybe the pressure will encourage accountants to take action with their marketing?
Posted by: Bob Harper | Portfolio Marketing, 14 Apr 2011 | 12:41