Azets, the UK’s Largest Regional Accountancy says – Extending winding up petitions again could unintentionally push many viable SME businesses into insolvency
14th December 2020
Extending winding up petitions again could unintentionally push many viable SME businesses into insolvency
Commenting, Fraser Campbell, UK Head of Accounts & Business Advisory Services at Azets, the UK’s largest regional accountancy and business advisor to SMEs, said:
“The unintentional consequence of the Government’s decision to extend winding up petitions is it will likely push many more small and medium sized businesses into liquidation or to seek additional debt to cover short term cash requirements.
The policy is well intentioned but in reality what will happen is some, usually larger, businesses will use it as a means of not having to pay invoices on time, which supports their cash position but stretches the cash position of their supply chain.
If you’re a larger supply business, able to push that pressure down onto others, then you’re probably fine. Most SMEs aren’t able to do that so just end up absorbing the pressure till they reach breaking point. With all the other pressures on SME business, including Brexit costs and other pandemic related costs, that breaking point is easily crossed, pushing perfectly viable businesses into trouble.
The human cost of this is significant. Many SMEs are family business, built on long hours and a willingness to take a risk. They are the centre of many communities, as well as supporting regional city centres. They are responsible for one in every two people employed in this country and help thousands of young people every year to gain the skills they need to develop successful lives.”