Liverpool Society of Chartered Accountants


Begbies Traynor – RED FLAG ALERT

By Chartered One


The number of businesses in Liverpool facing significant financial difficulty fell in the final quarter of 2014, according to the latest Red Flag Alert report from business rescue and recovery specialists Begbies Traynor.

The research found that the number of businesses in significant financial distress fell by eight per cent since the previous quarter, with 1,782 firms across the city experiencing problems compared with 1,935 in quarter three.

The run up to Christmas had a positive effect for many retailers in the city, with four per cent fewer firms experiencing significant financial problems in the final quarter of 2014 compared with the three months to the end of September.

Professional and financial services businesses also had a positive fourth quarter, with 38 per cent fewer professional service firms and 31 per cent fewer financial services firms experiencing significant financial difficulty.

Despite the positive quarter-on-quarter results, most sectors saw a rise in the number of businesses experiencing financial problems when compared with the same period last year, with six per cent more firms across Liverpool in significant financial difficulty compared with the same quarter in 2013.

John Fairbrother, office managing partner at Begbies Traynor in Liverpool, said: “Liverpool has had a positive final quarter, with the number of firms experiencing financial difficulties dropping while neighbouring cities such as Manchester experienced significant rises.”

“Although with most sectors experiencing year-on-year rises and many bellwether sectors having a difficult final quarter, it is apparent that many businesses may struggle in 2015.”

Liverpool’s bars and restaurants struggled in the final quarter of 2014, with 34 per cent more businesses reporting significant financial difficulties compared with the three months to the end of September, and a year-on-year rise of 16 per cent.

Construction also saw a rise in the number of companies experiencing significant financial problems, with seven per cent more firms in difficulty than in quarter three, and 85 per cent more than in quarter four 2013.

John added: “A number of reports continue to indicate that North West businesses are becoming less confident about their future prospects. This, combined with increased pressure in the market, may lead to a further slowdown in the economy in the first quarter of 2015.

“It is therefore vital that companies start to plan for the future in order to avoid hazards which can have a significant effect on a company’s cash flow or financial situation.

“One way to do this is to ensure that the working capital available within the business is adequate as cash rather than profit is all important when managing finances within a challenging business environment.

“It is also essential to create a clear business plan that realistically reflects a firm’s future trading prospects, and allows them to continue trading, or grow, at a manageable rate without increasing their cost base – one of the main causes of financial difficulties for businesses.”

The Red Flag Alert report identifies the number of businesses facing financial problems and classifies them as either significant – defined as a court action or pending out-of-date accounts, or critical – those with County Court judgements totalling £5,000 or more within a three month period, a winding-up petition or have entered into a Corporate Voluntary Arrangement.


For further information contact:

Sophie Maycock
Tel:      0161 330 0337

Notes to editors:

About Begbies Traynor Group

Begbies Traynor Group plc is a specialist professional services consultancy providing independent professional advice and solutions to businesses, financial institutions, the accountancy and legal professions and individuals in the areas of recovery, corporate finance, investigations and risk management.  It is listed on AIM (Ticker: BEG).  Further information can be found at:

About Red Flag Alert

Red Flag Alert measures corporate distress signals through a comprehensive and complex methodology, drawing on factual legal and financial data from a wide range of relevant sources for companies that have been trading for over a year.

The release refers to the numbers of companies experiencing ‘Critical’ problems which are those with CCJs totalling over £5,000 within a three month period or winding-up petitions against them or which have entered Corporate Voluntary Arrangements.

The release also refers to the numbers of companies experiencing ‘Significant’ problems, which are those with minor CCJs (of less than £5k) filed against them or which have been identified by Red Flag’s proprietary credit risk scoring system which screens companies for a sustained or marked deterioration in key financial ratios and indicators including those measuring working capital, contingent liabilities, retained profits and net worth. 

Red Flag Alert is commercially available to all businesses, on an annual subscription basis, to help them better understand risk and exposure and help prepare them for the future.  Further information about Red Flag Alert can be found at: