Number of firms in distress on decrease
Fewer firms were experiencing financial distress during the second quarter of 2014 in Northern Ireland, according to a new report.
However, while the latest Red Flag Alert Survey from business rescue and recovery company Begbies Traynor said that sectors including automotive, bars and restaurants, construction and hotels and accommodation have all seen fewer numbers in distress, others have been faring less well.
While many firms appear to be streamlining and rationalising in preparation for a revitalised economy, there was a quarterly increase in the number of financial services, manufacturing and wholesaling firms classified as being in "significant" distress.
Joan Houston, Begbies Traynor partner in Northern Ireland, said that the 20% reduction from 3,712 Northern Ireland firms in the first three months of 2014 to 3,330 in the second quarter who were in significant financial distress is a welcome indicator.
But she said that the predicted 1% rise in interest rates is likely to impact a material number of small and medium firms already experiencing significant distress.
"The survey results indicate that there is still a need for companies to take radical action if they want to remain solvent," she said.
"The paradox in an improving economy is that while business confidence grows, SMEs stretch themselves without financial support to try to keep pace with the wider UK recovery and then fall into distress."