“The conflict in Iran is already taking a toll on businesses and balance sheets across the UK. Directors who were previously surviving have been concerned about the impact the war will have on their finances, and the increase in costs it caused has been the tipping point for many firms. The longer this carries on, the bigger impact it will have on margins, access to finance and affordability of funding, as well as consumer spending as households attempt to manage their own costs and cut back on anything that isn’t essential.

“With the war likely to continue, cost pressures continuing to be a problem and additional expenses like the new business rates and the changes to national minimum wage taking effect this month, it’s very likely demand for insolvency support will increase in the coming months.

“Businesses have been battling to survive since the start of the pandemic and for many firms, this triple whammy of geopolitical issues, increased costs due to changes in legislation and years of trading through tough times could be too much for them to manage.

“The IMF economic forecast is also a prediction of the effect the war will have on businesses, and with consumers facing war-related cost increases and hikes in a series of taxes and bills at a time when money is tight, they are likely to cut back even further which will be another blow for them, for companies, supply chains and the economy at a time when everyone badly needed a boost.

“From a sectoral perspective, while retailers have benefitted from the Easter Bank Holiday, the reality is that no one is sure whether rising volumes are driven by inflation or sales, and consumer caution around spending is likely to hit this businesses in this industry and hospitality at a time when they really needed a boost.

“Construction firms are also suffering as the Iran conflict has increased costs and hit client confidence and willingness to commission work, while February’s poor weather has hit live and planned projects, which will affect firms across the supply chain. 

“And in the car sector, the public’s growing appetite for electric vehicles is hitting those across the supply chain whose business involves traditional cars, with sales of battery and hybrid electric vehicles coming at the expense of those that ran on diesel or petrol.

“The positive in this is that the SME community remains resilient, with clients aware of the importance of taking decisive action at the signs of distress and being so close to the coalface they can see any issues that arise as early as possible. 

“In the current climate, seeking advice as soon as your business appears distressed is the best step you can take – it gives you more options to improve your situation and more time to take a decision about you next step. Lengthening creditor days, rising stock or nervousness about paying staff, suppliers, or taxes are signs something is starting go wrong – and that is time to seek advice from a specialist.”