Retail bloodbath: IPs warn it's survival of the fittest

After household names including Habitat, Jane Norman and Thorntons all either collapsed into administration or announced store closures, insolvency specialists have warned that the retail sector will continue to endure pain this year.

The news also followed a report from the British Retail Consortium (BRC) that said retailers were being hit by weak demand and surging prices for commodities and property, while employment costs remain high.

Brian Green, a restructuring specialist at KPMG who worked on the company voluntary arrangements (CVAs) for retailers Blacks and JJB Sports, said: “For the retail industry it is now a question of survival of the fittest.

“Companies with healthy cash flow, low debt levels and sustained customer demand will survive; conversely retailers facing a cash squeeze, large debt burdens, faltering sales and - particularly those with expensive and large store portfolios - will face a tough time.”

Green highlighted the most recent set of figures published by the Insolvency Service for the first quarter of 2011. This showed that retail administration appointments jumped by a staggering 55 per cent, with retail CVAs increasing by 30 per cent.

He added: “With the cushioning effects of suppressed interest rates having worn off, persistently worsening consumer spend is starting to crystallise in business failure. Unfortunately the fundamental economic indicators suggest that retail insolvency figures will continue to worsen this year.”

Green’s comments follow news that HomeForm, owner of KitchensDirect, entered administration and an announcement from TJ Hughes that it may have to appoint administrators. This comes on the back of HMV, Waterstones and video games retailer Game all reducing the number of stores.

Last month the BRC said numbers from the Office for National Statistics showed the weakest growth in sales values so far this year.

BRC economist Richard Lim said: “After the feel-good boost of April, which saw retailers benefiting from sunny weather and bank holidays, May was a return to reality. Consumers are overwhelmingly cautious about their personal finances and are reluctant to spend, particularly on big ticket items.”

R3 president Frances Coulson said the recent last quarter day for rent in June was the catalyst for many retailers’ collapse.

She added: “The high-street and the way consumers shop is changing and the rate of change has been sped up by the protracted economic downturn. The most significant change is consumers shift to the internet.

“Close to a third (31 per cent) are now shopping online more and this has definitely impacted on those retailers that have a heavy high-street presence.”

HMRC: £650m overdue under time to pay “is collectable”

HMRC was responding to figures which revealed the taxman was owed £970m by businesses under time to pay, and that £650m of this was overdue, while £320 is due for payment within an agreed deadline.

It was claimed that some businesses have deferred payment of their tax debts as many as four times under the scheme.

The latest figures emerged after a parliamentary question was put to HMRC from Lord Newby, co-chair of the Liberal Democrat Treasury parliamentary policy committee. Lord Newby asked how much money remains outstanding under the business payments support service, under which the time to pay operates.

Lord Newby was told that 395,400 time to pay arrangements have been made, involving £6.8bn of tax, of which £5.87bn has already been repaid.

Meanwhile insolvencynews.com has discovered that HMRC will not be publishing any more figures on time to pay after July.

A spokesman for HMRC said a consultation on continuing to publish the figures was launched earlier this year, although no press release was issued because the subject was not deemed “high profile” enough.

The consultation received no responses other than one from the Treasury and one internal response from HMRC. HMRC then decided that the July 2011 release of time to pay figures will be the last.

HMRC added that the majority of businesses that have entered into time to pay arrangements are “fundamentally viable” and are still in business “in no small part” due to the practical support provided by its arrangements.

The spokesman for the authority added: “Around 90 per cent of the tax rescheduled has been paid and this, coupled with the enormous benefits that small businesses deliver to the country through tax revenues, jobs, and long term expansion, strongly justifies our pragmatic approach.”

HMRC said the £650m is collectable and will either be subject to further time to pay when appropriate, or to its normal debt collection procedures.

Those arrangements which have not been paid in accordance with their schedules will have undergone standard HMRC recovery and enforcement action.

This will involve further recoveries, but HMRC said it is not possible to identify these separately as being related to earlier time to pay agreements.

HMRC’s spokesperson added: “Time to pay is designed to help businesses with short term cash flow difficulties and we are well aware that multiple applications may be evidence of a deeper structural problem with implications for the long term survival of the business.

“So when a business makes multiple applications we probe to ensure the request is driven by a short term cash flow problem, rather than a deeper and insurmountable one.”

Private Investor to the Rescue!

This month we’re offering two short case studies highlighting recent work we’ve carried out for clients. As you know we are set up as a transaction based business. We rely on referrals and will never seek to overlap work that our introducer can ably carry out. That said we don’t believe there is anyone in the UK who so regularly delivers urgent capital to businesses as we do.

Talk to us if you know of a business that has a need for capital. Our network of investors is unparalleled in the UK numbering well in excess of one thousand high net worth individuals. We offer an honest and swift appraisal of any situation and we'll happily meet with the owners at no cost or commitment.

Interior Design & Consultants  - Case Study

Our client provides high quality interior design and consultancy services primarily to the commercial market.  The business owner has enjoyed success over a period of more than 20 years and has a customer list with a truly global reach. Post-recession, a number of client relationships have regenerated and an impressive order book has been built up.

In 2010 we introduced our client to investors and helped close the investment transaction. The investor concerned worked within the industry and this element was seen as crucial to the fit. Unfortunately, over a relatively short period of time, this relationship broke down and we were engaged for a second time to find a new investor.

In a very short timeframe, not only had we found and introduced a new investor – also an established individual within the trade, but we helped negotiate exit terms from the previous relationship. An amicable settlement was reached, leaving our client clear to enter terms with this new party.

"I was completely happy and satisfied with the service that we received from Beer & Young who clearly understood both parties’ needs and acted accordingly. They were always on the ball, reacted speedily to all situations and we are completely indebted to them for introducing us to an ideal investor partner enabling the business to survive and grow from a very precarious position and in addition complementing the investor’s business. I would have no hesitation in recommending Beer & Young to others".

Wholesaler / Distributor – Client Testimonial

As you can see from the testimonial below, our client had a serious issue with HMRC

Our business had been re-financed but had significant historic arrears with HMRC. We reached the point where HMRC moved our case to the solicitors’ office who would then issue a winding up petition. We called Beer &Young who swung into action straight away. They were able to persuade HMRC to take an immediate step back, giving us the chance to re-submit proposals for repayment. Beer & Young managed the whole process for us and we’re delighted that they were able to negotiate workable terms for us. I recommend any business with HMRC problems to contact them. They will act immediately, clearly have an excellent reputation within HMRC and are able to deliver results. Thanks again for your help.

AW, Director

Helping business owners deal with tax arrears

For this month’s news story we thought we’d highlight our non-core, but extremely important, area of our business – namely helping business owners’ deal with tax arrears.

Over the past 10 years or so we’ve been dealing with HMRC in their various forms, and since early 2009 when the recession started to bite we’ve been really active in this area. Since this time we’ve helped many dozens of businesses negotiate or re-negotiate workable payment terms with HMRC. We’ve offered a couple of client testimonials below. Before we move onto these comments, it’s worth offering a few pointers to business owners and finance directors.

1.     Don’t ignore the letters that arrive, once your case has become live, it won’t go away by ignoring it.

2.     HMRC have been very helpful in offering time to pay arrangements. Whilst these are not coming to an end, there is value to you in having a third party negotiate on your behalf as the scheme has been tightened significantly.

3.     There is a point where the taxman loses patience with the business owner or their management and begins to take action. This is not the end of the road, but a realisation that you must take advice and engage with a specialist firm.

If you are at the early stage of arrears, or about to miss your first payment, be it PAYE or VAT, it is important to communicate effectively with the relevant department.

Here are some recent testimonials demonstrating the quality of Beer & Young’s work in this area. Please contact us to talk about any issues you have.

Wholesaler / Distributor

Our business had been re-financed but had significant historic arrears with HMRC. We reached the point where HMRC moved our case to the solicitors’ office who would then issue a winding up petition. We called Beer &Young who swung into action straight away. They were able to persuade HMRC to take an immediate step back, giving us the chance to re-submit proposals for repayment. Beer & Young managed the whole process for us and we’re delighted that they were able to negotiate workable terms for us. I recommend any business with HMRC problems to contact them. They will act immediately, clearly have an excellent reputation within HMRC and are able to deliver results. Thanks again for your help.

AW, Director

Manufacturer of Specialist Fastenings

“Before I met with Beer & Young, my Company was in serious financial difficulties.  I had been through a poor trading period and our tenant had recently gone bust.  I

had creditors chasing me and we had arrears of both PAYE and VAT.  The sales finance company were restricting our facility and I was being advised to liquidate the business, which was the last thing I wanted to do. Beer & Young suggested the Company propose a CVA and on my behalf they talked to HMRC, the sales finance company as well as some key trade suppliers with the result that the CVA was agreed.  Thanks to Beer & Young, my company has survived the crisis and now sales have recovered to record levels I am confident my business has a future.”

Owner

Six million people behind on bills, says R3

Around six million people are behind with their bills and payments as record numbers experience financial distress, according to insolvency trade body R3.

About eight million people are due to go into their overdraft this month, with two million believing that they will go into an unauthorised overdraft position, according to research published in R3’s latest Personal Debt Snapshot report.

The study also finds that 36 per cent of  people believe that their financial situation will worsen over the next six months, while 32 per cent of people are now saving less than they used to – this equates to 15 million people.

R3 president Frances Coulson said: “These figures make for worrying reading. It is clear that many have found themselves in a position whereby they have to go into and often exceed their agreed overdraft in order to keep on top of their bills and debt repayments. “Unfortunately, more often than not this leads to bank charges, which further deplete the amount available for bills. It’s a catch-22 situation which can result in debts snowballing.”

Coulson said a sudden change in circumstance such as redundancy tends to trigger insolvency.

She explained that  with many people effectively experiencing a pay cut as living costs continue to rise, it is not always possible to set aside money for a “buffer”.

Coulson added: “Our research shows that 19 percent of people now set a budget. This is definitely a positive step as, for those who are struggling with their debts, a budget is a key tool which allows you to clearly compare how much money you spend against your income. This will help to identify if any savings can be saved and where.”

Project Merlin fails to hit target

Bank loans to small businesses fell £2.2 billion short of their target for the first quarter of 2011 under the Project Merlin agreement, according to official figures. Loans to small and medium-sized enterprises (SMEs) from the Merlin banks totalled £16.8 billion for the first three months of this year, falling short of the £19 billion lending target set out in the Merlin agreement between the banks and the government.

The shortfall was attributed to a lack of demand from SMEs, according to a statement released by the British Bankers’ Association (BBA) on behalf of the banks signed up to Project Merlin. 

HMRC in £1.5bn debt collection tender

HM Revenue and Customs has selected 10 debt collection agencies (DCAs) to work placements valued at between £500 million and £1.5 billion following a tender process.

The 10 agencies selected are in line to share between £30 million and £70 million in fees from the two-year deal, were notified of their selection on May 20, following what one DCA chief executive called “the largest tender the industry has seen in 20 years”.

Probes into bank failures to be made public

The Prudential Regulation Authority, the new financial services regulator, will have greater powers over the banks and will make public its investigations into banking failures.

Hector Sants, chief executive of the Financial Services Authority, which will be replaced by the Prudential Regulation Authority (PRA), said the new agency will also be given more powers to block bonuses and dividend payments by UK banks.

The new powers will come under a more intensive supervisory approach that has been adopted by the FSA since the financial crisis.

Sants said the PRA will utilise powers to block bonuses if it believes that such payments break new rules on risk management and capital adequacy. 

His comments emerged as the Bank of England and the FSA published a joint paper, entitled The Bank of England, Prudential Regulation Authority – Our approach to banking supervision, which sets out how the PRA will supervise banks, building societies, credit unions and investment firms.

Hector Sants, PRA chief executive designate, said: “The PRA’s purpose is fundamentally different from that of previous regulatory regimes and will lead to a significantly different model of supervision to that which was in use pre-2007.

“In designing this new model we have incorporated both the lessons learned from the last financial crisis and those from firm failures of the past.”

He said the new regulatory model will be based on forward looking judgements and will be underpinned by the fact that the PRA has a single objective: to promote the stability of the UK financial system.

Andrew Bailey, FSA director of UK banks and building societies and PRA deputy chief executive designate, said: “Maintaining financial stability is an objective in public policy which we should all value highly. We have seen what happens when we lose it. 

"But achieving and maintaining financial stability does not mean that we have an industry in which no-one can fail."

Angela Knight, chief executive of the British Bankers’ Association (BBA), said the trade body supported “sensible reform” and the formation of the PRA to “take forward the lessons we have all learned.”

She added that the new body needed to attract high calibre staff as supervisors.

Small firms may miss out on £2.5bn fund

Most small businesses seeking affordable finance will miss out on a new £2.5bn equity fund launched by the UK’s largest banks, a business lobby group has warned.

The Forum of Private Business said the criteria to access the Business Growth Fund, launched by banks and the British Bankers’ Association (BBA), will put many businesses off from using the scheme.

The Business Growth Fund allows banks to take stakes of between 10 per cent and 50 per cent in high growth businesses, with turnovers of between £10m and £100m, in return for investments of £2m to £10m.

But according to the latest figures from the Department of Business, Innovation and Skills (BIS), just five per cent of small and medium-sized enterprises (SMEs) have funding requirements of £1m or more, with just under a quarter (23 per cent) needing between £10,000 and £24,000.

The FPB said a paltry one per cent of SMEs are seeking equity finance (down from two per cent in 2006/2007), with most choosing not to sacrifice a stake in their businesses and preferring debt lending in the form of bank loans (40 per cent), and overdrafts (35 per cent).

The forum said it is concerned that the fund will not help the vast majority of firms struggling to find the cost-effective finance necessary to compete for new contracts, create jobs and drive economic growth.

FPB senior policy adviser Alex Jackman said: “The Business Growth Fund aims to bridge the clear gap in funding for high growth firms identified in the Rowlands Review back in 2009 and so is certainly a welcome step and one that is long overdue.

“But we cannot allow this to overshadow the real problem – the lack of affordable lending being made available by banks to start-ups and other small businesses – those that are not eligible to benefit from the fund.”

Jackman added: “There is a real danger that these firms will be left behind and that would be disastrous for the economy.”

Under the Business Growth Fund the banks are committing to provide £1bn of equity capital over three years and £1.5bn over 10 years.

Conceived as part of the BBA's taskforce last autumn, the fund was central to the Project Merlin deal struck between the government and major banks. The deal included an increase in lending to SMEs and restraint on bank bonuses.

Insolvency Service to tackle termination clauses

This week we have attached an article that is relevant to many of our clients. The issue of keeping suppliers on board when re-structuring is an important one, however suppliers who “blackmail” clients during these times need to be deterred from doing so. Whether a new  moratorium will be effective remains to be seen.

The Insolvency Service has confirmed that it will finally tackle termination clauses, under wider proposals to create a moratorium for firms which need debt restructuring.

Termination clauses, whereby suppliers can cancel vital contracts and therefore threaten a firm’s rescue plan, will be looked at as part of the Insolvency Service’s next stage of considering how to create a moratorium.

The Insolvency Service recently published responses from the profession to proposals for creating the moratorium.

The moratorium would provide viable businesses some breathing space, outside of a formal insolvency procedure, to restructure their debts successfully.

While publishing the industry’s response to the moratorium proposals, Edward Davey, the minister responsible for the insolvency regime, said: “There have been suggestions that a greater impact might be achieved by the restructuring moratorium were it also to tackle issues such as termination clauses.”

The minister also confirmed that responses suggested the moratorium could tackle “cram down” mechanisms, to reduce the power of small creditors to block proposals.

He added that there would be further talks with stakeholders to explore the level of support for addressing these issues and “the best way to do so.”

His comments follow a campaign led by the insolvency trade body R3 for a law change to stop suppliers threatening to cancel contracts, thereby preventing them from blackmailing insolvent firms which are trying to engineer a rescue plan.

R3 estimates that around 2,000 more businesses could be saved annually as a result of tackling these practices.

R3 president Frances Coulson said: “R3 has been campaigning vigorously on this issue as part of its Holding Rescue to Ransom campaign to stop suppliers taking unreasonable actions during an insolvency, thus sabotaging any potential rescue.”

The Insolvency Service, while providing a summary of responses to the moratorium plans, said the urgency of the case for introducing it was “not as great as previously thought.”

One of the key elements that will need to be refined is the powers and responsibility of who monitors the moratorium.

Both HSBC and Royal Bank of Scotland told the Insolvency Service that qualifying floating chargeholders should consent to the choice of monitor.

Views were split on whether to have an extra court hearing for the extension of a moratorium to cover the formal approval of a CVA proposal. The vast majority of respondents said the court should grant any extension of a moratorium.

Insolvency Service officials will now refine the moratorium proposals and consider in more detail the issues raised.

SMEs risk export losses through currency "knowledge gap"

A "knowledge gap" about protecting businesses from currency fluctuations means British SMEs risk losing thousands of pounds on export deals, a new report has warned.

The study by American Express FX International Payments showed that despite belief in an "export-led recovery" being generally strong in the UK, 23 per cent of companies are actually looking to pull back on their international trade due to worries over volatile exchange rates and red tape.

Over half (56 per cent) of those who are losing confidence in exports cite the sharp fluctuations in the euro as their biggest concern.

American Express said the UK's top export markets - Germany, Spain and Poland - all use the euro and, without safeguards against the risk of currency volatility, the 55 per cent of SMEs that trade internationally could lose thousands.

It added that a company with an exposure of €300,000 over three months starting in October 2010 could have saved £19,745 if it had purchased an incoming forward contract rather than taking the spot price for the euro in January 2011.

However, despite the potential losses, 55 per cent of SMEs do not use such protection and 28 per cent have never even considered it.

American Express FX International Payments general manager, Rocco Magno, said, "After a tempestuous year for currencies, it's not surprising that currency fluctuations are the number one concern for SMEs trading internationally.

"Worryingly, these fluctuations are not only affecting confidence, but also the bottom line for SMEs due to a knowledge gap on how businesses can protect themselves from these fluctuations."

Liverpool came too close to collapse, says UEFA official

Irrespective of your personal football leanings, this is an interesting turnaround story…

One of UEFA’s most senior officials has warned MPs that Liverpool Football Club came within hours of going into administration. William Gaillard, an adviser at UEFA, the governing body of football for Europe, told a parliamentary inquiry into the governance of English football that Liverpool was an example of why financial fair play rules have to be brought into the game.

Gaillard, one of UEFA president Michel Platini’s closest advisers, warned a committee of MPs that Liverpool had come perilously close to going under after Tom Hicks and George Gillett loaded it with debt, before the club was taken over by American firm New England Sports Ventures (NESV) company.

Gaillard said: “We’ve seen more than 80 clubs in Europe in 10 years going into administration.

“Leveraged buy-outs for many clubs end in disaster. Just take Liverpool where you have owners who came, contracted debt, bought out the previous owners and saddled the club with the debt.”

Gaillard told the inquiry that what brought Liverpool down was “two failed banks, one British, one American,” which had been nationalised. He added: “They suddenly found themselves being owned by two failed banks that had been taken over by governments – Royal Bank of Scotland by the British government and Wachovia by the US government.

"The club has now been rescued and thank God because it has tremendous heritage - but it was a close call."

UEFA's new rules are designed to force clubs to break even after an initial period of flexibility. They tighten up the access to the Champions League for clubs burdened with huge debts.

Gaillard cautioned against sudden massive investment by unpredictable and untrustworthy parties.

"We at UEFA feel if a person brings equity, that is much better sit than if he brings debt," he said.

Bars and restaurants top table of 'distressed' businesses

There was a 15% increase in financial distress across all business sectors in the first quarter of this year, according to a large business recovery firm. The firm's Red Flag Report shows a 70% year-on-year rise in the number of businesses in the bar and restaurant sector showing signs of distress. Some 60% more businesses in the professional services sector were in a similar position. The firm commented that sectors relying on discretionary consumer spending were "beginning to show the effects of anticipated job losses."

Redflag report reveals: 186,000 firms in financial distress

Just over 186,000 UK companies are experiencing significant or critical financial problems compared with around 161,000 in the first quarter of 2010, according to an Insolvency Firm.

The insolvency firm’s latest Red Flag Alert, published today, claims that a total of 186,554 firms are in financial distress, a 15 per cent rise from 161,601 businesses year on year.

The report also reveals how specific sectors are suffering: year on year, the number of businesses showing signs of distress is up by 68 per cent in the bar and restaurant sector; by 60 per cent in the leisure and culture sector and by 23 per cent in the sports and recreation sector.

Other sectors also experienced worsening condition from the last three months of 2010 into the first quarter of 2011.

The Red Flag Alert reveals that 25,031 businesses in the construction sector were facing significant or critical financial problems in the first quarter, a 31 per cent rise on 19,167 construction companies in trouble during the fourth quarter of 2010.

There was an 87 per cent rise in the number of professional services firms in difficulty, to a total of 15,526 in the first quarter, from 8,293 in the last three months of 2010.

There was also a 92 per cent rise in the number of bars and restaurants in financial distress, to 4,505 from 2,347 businesses in the fourth quarter of 2010.

The Executive Chairman of the insolvency firm, said: “The figures for the first quarter of 2011 show the number of UK companies facing ‘critical’ problems has risen year on year with significant increases across the leisure sector in particular.”

He emphasised that the sectors which rely almost entirely on consumer discretionay spending were suffering the most.

He added: “Compared with our figures for food retail which show little change, it seems likely that a fall in consumer confidence and spending power driven by anticipated job losses lies at the core of the leisure sector’s troubles.”

The Executive Chairman explained that another marked increase was evident in the professional services sector where the number of firms showing signs of distress was up by 61 per cent compared with the first quarter of 2010.

He added: “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 first quarter of 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.

“High levels of legal actions taken against debtors indicate that creditors are attempting to maximise cash collection right across their customer base.”

UK Consumer Prices Index - February

Some good news this week…

There is no doubt that businesses continued to struggle through the early months of 2011, but the fall in inflation for February can bring some relief to us all. UK Consumer Prices Index annual rate of inflation has fallen to 4%, down from 4.4% in February.  The fact that inflation has fallen may at least buy the Bank more time before it has to see if the economy can walk on its own without the support of record low rates.

Private Investor Delivers Much Needed New Capital

Many business owners come to us with a similar tale - a history of profits, but two years of recession has weakened the balance sheet, and they've suffered. 2011 brings a renewed opportunity for growth, but how do they fund this? Can't rely on banks...they have their own issues and are struggling to lend to SME's in today's climate.

Beer & Young specialise in raising capital urgently for businesses which have a need for capital. Our network of private investors is unmatched in the UK. Investment from private investors can be the answer: it enables the business to secure its immediate future and gives it the funds necessary to plan for growth and profits.

There are solutions to the funding problems facing many UK businesses - we are pleased to highlight another success in 2011. The names have been changed to protect the innocent.

Beer & Young were engaged to raise funds for our client, Product Promotions Ltd.

Established in 2000, Product Promotions achieved continuous growth until the late Noughties, at their high point achieving sales of £5 million whilst delivering excellent returns for the directors/shareholders.

The recession hit our client hard with many blue chip customers reducing their spend, the result of which put our client into a loss making position. Having traded through this period - under some duress - they were unable to fund the numerous new sales opportunities that had arisen as their customer base returned.

Beer & Young generated considerable interest from potential investors. We are delighted to report that after the usual period of due diligence, one investor has injected £400,000 of new money into the company.

This investment has given PP a much needed boost to the working capital position and balance sheet. Their bankers can relax somewhat with over £500,000 of debt still to be serviced. The danger of looming business failure has now gone.

We wish both client and investor well for the future.

Private Equity and Business Insolvency

Nicholas Young, MD of turnaround specialists Beer & Young, noted with interest the comments in this week’s edition of insolvency news; 

“During one of the toughest times in living memory across the public sector, HM Revenue and Customs, Treasury and Insolvency Service staff have all privately told insolvencynews.com this week that the only option is to plough on regardless. The Insolvency Service's steep challenges were recently laid bare in a blunt address from a union boss, at a time when the organisation is seeing significant influence over its own affairs shift to the Treasury, as well as the Department for Business, Innovation and Skills”.  

These comments mirror our own experience at the present time. Rightly so HMRC are getting tougher with non-payers of tax, and whilst it is also more difficult to make 12 months + arrangement on the Time to Pay scheme, it also seems there is a reluctance by the Tax Offices to seek recovery actions through the courts for legacy debt particularly where the business in question is now paying current taxes on time.

Beer & Young Commended at Business Moneyfacts Awards

We are delighted to announce that Beer & Young has picked up the ‘Commended’ Award for ‘Best Corporate Finance Boutique’ at the Business Moneyfacts Awards ceremony held on 24th March at the London Marriott Hotel, Grosvenor Square.

The Business Moneyfacts event celebrated its 10th year and was attended by some 400 industry professionals.

 Lee Tillcock, Editor of Business Moneyfacts said “the ceremony has recognised those providers, brokers and trade bodies that helped to make 2010 a more positive year for businesses”

Government disagrees with itself on the impact of Business Link's closure, says enterprise group

Government research into the potential impact of the closure of Business Link suggests ministers will not meet their own objectives for effective business support, an enterprise group has suggested.

The national enterprise network, which represents local enterprise agencies, made the claim ahead of the winding down of local elements of government-backed Business Link services which will be replaced by the main national Business Link website and a call centre.

The group pointed to research commissioned by the Department for Business, Innovation and Skills in November 2010 which concluded: "A reduction in the availability of Business Link’s face to face service could result in a lower take-up of external advice, and confusion remains about which sources of advice to trust.

"Start-ups and new businesses will be particularly affected as they are the least likely to know what support they need, the least able to find or trust appropriate support and the least able and willing to pay for this support."

The study also found that for many entrepreneurs, the Business Link website complements, rather than substitutes for, telephone and face-to-face support, is not a key route to face to face support and is "barely looked at" by many company owners before getting in touch for advice.

All this, NFEA said, conflicts with the government's heavy focus on online support in the new system of business support. "Online business information is undoubtedly valuable but it appears that this is rarely regarded as a useful form of business support, other than in answering factual queries," the organisation added, "Nor is it seen as an adequate replacement for face to face advice.

"We appreciate that major changes to the website are planned, but this is a massive task and whilst it may improve the usability and relevance of the content, it will not remove its perception as a government-owned service, the use of which will benefit the government rather more than the business user."

NFEA also criticised the government's suggestion that "the best advice for business comes from other experienced business people". The group disputed this saying that while experience is important, qualified and professional business advisers offer the best guidance.

"The best musicians do not make the best music teachers, and vice versa," it added. "The best footballers do not make the best football coaches, and vice versa. And we would suggest that successful business people do not always make the best business advisers, nor will they necessarily make the best business mentors."

Concluding its list of concerns, the NFEA said it was worried that the abolition of the local Business Link service "will have a damaging effect on the rate of new businesses coming through, the quality of their management, the rate of their growth and ultimately their sustainability".

Article sourced from businesszone.co.uk

Corporate failures fall more than 10 per cent

The number of UK firms going bust dropped in January by more than 10 per cent when compared to the same month last year, according to Experian’s latest Insolvency Index.

The credit reference agency’s figures revealed that 1,266 businesses failed in January 2011, down from 1,426 during the same month in 2010.

Further findings from the research showed that businesses in the south west were among the most robust, with insolvencies in this region falling 11 per cent.

Wales and the north west were the only two regions to see an increase in the rate of business insolvencies when compared to the previous year, with a 33 percent rise in the north west and 56 per cent in Wales.

Max Firth, managing director of Experian pH, said: “Our analysis shows that business failure rates are falling steadily and the financial strength of the UK’s business community is improving.

“Our data also shows that the post-recession business population is beginning to increase once again, with the net number of firms trading up by one per cent when compared with last January.”

Nicholas Young, Managing Director at Beer & Young comments: “These figures are of course welcomed, particularly in light of the poor trading for the previous quarter for “UK plc”. However, whilst business failures are down, so many businesses are struggling with their finances. Balance sheets are weak and banks are themselves finding it difficult to lend to SME’s. Equity funding can be the answer. Private investors have capital available and bring added value skills with their money. They can be the difference between growth, profits and business growth, over struggle, firefighting and stress for business owners.”