Severe weather ‘could cause business insolvency’

Companies could be left facing the prospect of corporate insolvency if they fail to plan for the possible effects on trade of severe winter weather, new research has indicated.

A survey by insolvency trade body R3 has found 84 per cent of businesses believe they would be adversely affected by a repeat of the extreme weather seen last winter.

The problems mentioned by companies varied from 61 per cent saying they may be short-staffed due to their employees having difficulty getting into work and 48 per cent indicated their takings would be lower.

And for six per cent, the fear is that such a weather situation could leave them needing to seek the help of insolvency practitioners, a figure rising to 11 per cent for the retail and distribution sector.

One obvious reason for this is that the physical presence of staff to serve at counters, drive and move goods around warehouses and retail premises contrasts with the greater potential flexibility of firms where work can be done from home through online means, ensuring even those snowed-in can still operate.

Commenting on the situation, R3 president Frances Coulson also noted the organisation’s research has shown retailers are more concerned about their debt levels than other companies – a worry felt by 41 per cent – while 58 per cent have seen profits fall, 24 per cent more than the average for all types of enterprises.

She added that retailers already face the twin threats of consumers reducing their Christmas spending and a “hefty” one-off quarterly rental payment.

Ms Coulson concluded: “If a business is already struggling and does not think it will withstand the pressures of severe winter weather, it should seek the advice of a professional to ensure it has the best chance of survival.”

The most recent Economy Watch survey from the Forum of Private Business found 43 per cent of companies are not very confident about their prospects in the current economic climate, with 11 per cent being pessimistic and six per cent very pessimistic.