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CreditorWatch notes that business defaults rose by 20% in the past month, with an average of 10% increase over three months. They note that there is something of an artificial economic environment due to lockdown. This is compounded by uncertainty due to the duration of lockdowns.

Accountants are being relied upon to assist with grant applications and eligibility retests, but it is suggested that some accountants may propose business closure as a strategy. In general accountants have the measure of their SME clients, and a feel for whether such entities are viable or not. The decline in trade receivables (12.5%) plays into this.

Government support has prevented business closures on a wider scale that was feared, but a rise in external administrations seems inevitable. The outcome remains to be seen.

Business owners are encouraged to reconsider their future projections and the real possibility of restructuring their affairs ahead of what some are saying could be as bad or worse than the GFC.  Feel free to contact us for some expert guidance to see you through the next cycle.

Source:  AccountantsDaily