According to new research released by Begbies Traynor, over the past year the number of recruiters experiencing financial difficulty more than doubled.
Begbies Traynor, a firm which specialises in business rescue, recovery and restructuring carried out research which found that the number of firms who were experiencing critical financial difficulties in the second quarter of 2008 was 24 and over the past 12 months this number has increased to 55 – an increase of 129 per cent. Their research also concluded that the number of firms experiencing significant financial problems increased by 90 per cent between the second quarter of last year and the same period this year. There has also been an increase of 67 per cent in the number of recruiters experiencing critical financial problems between the first and second quarters of 2009.
These critical problems are defined by Begbies Taylor as companies who have County Court Judgements equating to £5,000 or more and or claims relating to wind-up petitions. Companies with significant problems are those who have insolvent or out of date accounts and/or court actions.
Partner at Begbies Traynor, Nick Hood commented: “Recruitment companies serving all levels of the job market are now starting to feel the severity of the economic downturn and as we approach the seasonally quieter summer period, this may be the tolling bell for severely struggling companies.”
He continued, “Over the medium term, the situation will only worsen as unemployment is a lagging indicator and its full effects are not going to be seen until even later in the recession.”