Business insolvency experts are warning that thousands of firms are at risk of collapse in 2023 as the cost of living crisis continues.

The number of seriously at risk firms increased by more than a third at the end of last year, according to insolvency firm Begbies Traynor.

Inflated prices and, in particular, rising energy costs are a key concern for firms, especially after the government announced that it would be cutting support for business energy bills from April.

Worries over consumer belt-tightening and the lasting impact of coronavirus business loans are other key concerns for struggling firms this year.

Umbrella.UK Insolvency’s Licensed Insolvency Practitioner Tom Fox said: “We’re starting to see more calls from businesses that are wondering whether they should close up or carry on.”

Speaking to the BBC, the co-founder of Cloudwater Brew Paul Jones said the situation was like a “never-ending nightmare,” and that he probably thinks about shuttering the business once per month.

The Manchester-based brewery has been in “survival mode” since March 2020, trying to deal with high costs, debt, low consumer confidence and post-Brexit trading problems.

Paul said: “I feel like continuing is either not possible or not worth it. We’re going to keep going. What else can we do?”

Begbies Traynor research suggests that the number of companies in critical financial distress increased by 36% in the final quarter of 2022.

A firm is said to be in critical financial distress when it has more than £5,000 in county court judgements (CCJs) or a winding up petition filed against it.

Tom Fox said: “Running a business that’s in acute financial distress can take an incredibly toll on the mental health of owners and managers. But this is no excuse to stick your head in the sand.

“Whatever position your business is in, it’s important you act early and decisively. The sooner you seek professional advice, the more options you’re likely to have for saving your business.”

For more information about business insolvency, speak to a member of the team today. Call: 0800 611 8888.