PwC Restructuring Update—Q1 2024

Insolvency rate heads back to pre-pandemic levels

Insolvencies rose by over a third in Q1 2024 compared to the same quarter in 2023. The number of business failures have more than doubled from 102 recorded in Q1 2022 to 223 recorded in Q1 2024. There was also a 41% increase in the total number of insolvencies recorded when comparing 223 in Q1 2024 and 158 in Q1 2023.

Our PwC Insolvency Barometer shows that we’re slowly returning to pre-pandemic levels. The current annual business failure rate is 28 per 10,000 businesses compared to 36 per 10,000 businesses in 2019.  

Although the current rate has almost doubled since 2021, when the rate was 14 per 10,000 businesses, it remains well below the previous peak of 109 per 10,000 businesses back in 2012. 

Furthermore, if the rising trend of insolvencies continues over the next three quarters, 2024 is on track to exceed the pre-pandemic levels of 850 recorded insolvencies in 2019.

Rescue processes (examinerships and SCARPs) made up just 3% of insolvencies in Q1 2024 compared to 6% in Q1 2023

Q1 2024 saw 2 examinerships and 5 SCARPs, compared to 2 examinerships and 8 SCARPs in Q1 2023. These rescue processes continue to be underutilised and the relatively low numbers during Q1 2024 may have been impacted by the extension of the Revenue debt warehousing scheme as outlined in our report.

The UK recorded its highest quarterly levels of business failures since records began

The UK recorded 6,732 liquidations in Q4 2023, which is the largest number of business failures on record. Q4 2023 exceeded the previous quarterly highs set during 2022 and 2023. The liquidation rate in the UK continues to be almost double the equivalent Irish rate.

Five ways to optimise your company’s cash culture

1. Make cash everyone’s business

Cash is bigger than the treasury and finance departments. They both have a key coordinating role in effectively managing cash, but it’s the operations of the business that make daily decisions that impact cash. Push cash up everyone’s agenda.

2. Cash can mean different things to different people, so make cash relevant to everyone

Having a common cash language across the organisation (operations and finance) is vital to instilling a proactive cash-conscious culture that produces:

• reliable cash forecasting;

• effective expenditure management and tactical actions;

• cash reporting and incentivisation, tailored to audiences across the organisation;

• management of cash tax and government incentives;

• centralised management of true cash availability and foreign currency cash; and

• effective management of banking and other financing facilities.

3. Forecast cash and conduct appropriately granular scenario planning

This should involve operations and finance teams, as they are essential in reflecting and understanding the real operational risks in the current volatile market.

4. Understand and share your minimum cash thresholds

This will help colleagues in the wider business manage their daily decisions and cash commitments (once the decision is made, the cash is committed).

5. Optimise supplier and customer working capital terms and relationships

This will help conserve and generate the cheapest form of cash available to you.