The past few years have been tough for firms operating in the construction and home improvement markets, with many struggling to find work and balance their books.
An increase in costs thanks to inflation has come hand in hand with a fall in the number of available contracts thanks to government cutbacks and general caution among businesses and individuals throughout the UK.
To make matters worse, the 2012 London Olympic Games are almost here and most of the contracts available for the international sporting event have either been fulfilled or designated.
As such, many firms find themselves under financial pressure, with some struggling so much with debt that they require the services of insolvency practitioners.
One such enterprise is windows, doors and double glazing manufacturer and installer Profix Limited.
The company has accrued debts of approximately £750,000, but has a turnover of more than £3 million per year.
Bosses at the firm believe that while the balance owed – a large chunk of which is to Her Majesty’s Revenue & Customs (HMRC) – is significant, there is still value in it.
As a result, they have turned to nationwide insolvency and restructuring experts SFP for help in saving the business.
Simon Plant and Daniel Plant were made joint-administrators for the firm last month (September 23rd) and will now use all their experience as licensed members of the Insolvency Practitioners’ Association to come up with a solution.
Ideally, they would like to protect the company’s 33 staff, which work out of its Birmingham headquarters.
The SFP business recovery services experts are keen to underline that firms should make provisions for any money they might owe the tax man to ensure they do not end up in the same position as Profix.
SFP have noticed that an average of four in every five instructions it received this year have been down to large debts owed to HMRC.
Group partner and administrator Simon Plant encouraged firms to take all potential outgoings into consideration when planning their finances to avoid the possibility of being handed a winding up order.
“Making provisions for the tax bill is the only way businesses can ensure they avoid pitfalls like this,” he said.
Mr Plant added that Profix is a prime example of what can happen to a firm if it does not manage its incomings and outgoings wisely.
The expert predicted that there could be more insolvencies within the building industry, thanks in part to a lack of available work for existing firms.
“Profix has run into cash flow difficulties and we are currently in discussions with various interested parties for a sale of the business as a going concern. The construction sector is extremely competitive in the current economic climate with major building firms putting a squeeze on suppliers and margins,” he noted.
“Put simply, there are too many businesses chasing too little business. We are actively exploring options and hope for a successful conclusion [to the Profix problem].”
Profix offers its windows and doors in a range of finishes, with everything from Brilliant White to Irish Oak available.