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back to article Company collapses? We've only just begun, warn accountants

An insolvency firm has warned that company collapses could shoot up later this year, as HMRC begins to take a firmer line on payments and long-awaited spending cuts start to hurt public sector suppliers. Begbies Traynor, which produces the Red Flag Alert, said that 140,000 companies experienced "Significant and Critical …

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WTF?

Data

"According to executive chairman Rick Traynor, unemployment and corporate collapses have historically lagged behind "technical recessions" by one to two years"

Please can we gave a graph or some other data to back the statement up ?

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Let's consider this...

USA 2003

http://mises.org/daily/1279

Gordo patting himself on the back for having saved the economy is like somebody rejoycing he hasn't hit the shredder yet even as the tie is being eaten up,

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Anonymous Coward

I fear its not just HMRC

But companys pushing for payment as we have just had the quater rent and they see Vat bills and year end looming. I think we are going to see allot more companys closing before year end.

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Megaphone

Recession ends != Recovery

A recession ends [technically] when the economy [GDP] stops shrinking. One is then left with the shrunken economy. The dumb ass media interpret this as "happy days are here again" (take a bow Auntie Beeb aka Nu Lab's lapdog).

The adverse impact of a recession on business is presumably sustained until the economy has grown (at least) back to the size it was before that recession.

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Only one of the big problems

The biggest problem I've seen for small companies is large companies taking longer and longer to pay invoices. Some make an art of waiting until right at the end of the invoice payment terms before raising a query then insisting the invoice terms start again. I know more than a few small business that have gone bust through this and similar tactics.

Conversely, two of my suppliers (large companies) have turned my credit accounts into pre-pay even though I have an immaculate trading history with them and generally. Not critical for me but it is a cash-flow problem for many companies.

On HMRC though. The easiest way to keep out of HMRC's sights is to treat every penny that's due to them as separate and stashed away in a separate bank account. Treat it as their money rather than short-term financing and HMRC will never need to get involved. I know more than a few people that treat VAT takings as "their" money then grudge having to pay it out to HMRC at the end of a quarter; same with PAYE and NI, keep it separate and life is easier. Not exactly fitting with modern aggressive money-use practices but then HMRC will never be in a position to wind-up my company.

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Invoices

Ooooh the b*ggers. 30-day terms (30 days free credit for the customer) are now the exception, more operate on 45-day, 60-day and 75-day. Some will only pay on a 30-day cycle on a 75-day term (large UK pharmacy chain, I'm looking at you!) - this means if you time your invoice wrongly, you can be waiting 105 days for *your* money.

And it gets better - some of the big boys in their T's and C's (and I have an opinion as to what T's and C's stand for in these cases - whoever invented this policy) will even systematically, unilaterally *discount* your invoice by 2-3% just in order for them to pay within the term period (that's the 45+ days of free credit you're already giving them!)

It's shitty.

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Sustainable?

In some cases I wonder about the short sighted lending strategies that allowed such a rash of unsustainable business to sprout up.

At the same time I feel sorry for those with sound businesses who are being squeezed dry by unfavourable externalities - rent, rates etc.

Looks like a long fall to the bottom before this mess unwinds...

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Unhappy

Paradigm shift

At present the MSM and under 35's are sill looking at the boom years as the norm. I left university during the early 90's recession, had 6 jobs in 4 years, leaving each one through redundancy, started contracting before setting up my own business to fill a gap I saw in the market due to IT companies collapsing. Only in the early 2000's did the major IT companies begin to expand - so I sold up rather than go bankrupt.

This recession wont be any different. Another 10 years of instability with companies going under, start-ups struggling to survive, and no stability in the IT sector. By the end this will be the new norm.

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Anonymous Coward

Line up the Golden Geese

this is where taxation kills the economy. Economics 101, any money given to government generates 0 or in the case of Labour a negative effect on the economy.

To have a healthy economy, which is centred on the standard of living of the people inside the nation, you have to have low taxation, with most of the people working in the private sector, and no draconian laws based on outdated and outmoded morality.

It is easy to get an economy right just by following the above principles, humans interact well on a level playing field, but if you skew the field then it akk goes wrong. The public sector has to go, and it will be better for those in the public sector for this to happen.

Even better would be everyone in their own business, no employment just people operating through businesses, and for that to happen the red tape around business taxation needs to go.

The UK at the moment is a nation of miserable accountants, and they do nothing to actually generate anything of value, all they do is play the taxation game, it is pathetic and unsustainable.

And quite right who ever mentioned that an end of recession doesn't spell a boom time. The real problem of the UK is over population, too many people after too few resources, and because of that the UK has to be balanced with the same care of a master diamond cutter, fat chance we will see that in our MPs.

The UK is going into inflation and high interest rates very shortly, business and savers need it. If you are wise you don't get a mortgage now, even on fixed interest for a couple of years, you are going to eventually get screwed. And I wouldn't run into Gold, commodities or land those bubbles are about to pop and in many ways are already, wait for the businesses to go under and look for the startups that is the place to put some cash, or the stock market, business has to return it is the only way to get everything else back on track.

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