Finance problems grow for small firms

More small firms faced critical financial problems in the fourth quarter of 2010 than in the third, a new survey has revealed.

The Red Flag Alert Index, conducted by Begbies Traynor, showed that nearly a quarter (24 per cent) more firms reported significant or critical financial problems last month than in the three months leading up to October.

Ric Traynor, executive chairman of the group, believes that problems experienced may be exacerbated by the public sector cuts and other wider economic factors.

He commented: "Today's figures show that UK businesses are demonstrating real signs of distress and that trade creditors are both losing patience with their debtors and in need of collecting cash into their own businesses."

The retail sector is suffering the most with some 17 per cent more of firms reporting problems quarter-on-quarter.

The findings of the index backed up a separate report from the Federation of Small Businesses which recorded the lowest levels of confidence occurring in 2010, at the end of the year.

Published on: January 24, 2011

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