PwC Restructuring Update—Q3 2023

1%

quarterly increase in insolvencies in Q3 2023 compared to Q3 2022.
16%

quarterly decrease in insolvencies in Q3 2023 compared to Q2 2023.
0.2%

decline in UK insolvency figures—the first quarterly decline since Q1 2021.
< 4%

of insolvencies in Ireland over the last two years have been related to SCARP.

Overview

With a higher rate of insolvencies year-on-year and a busy fourth quarter expected, our latest Restructuring Update for Q3 2023 suggests that there could be as many as 650 insolvencies in Ireland by year-end. Although slight declines were recorded in August and September, this is in keeping with trends from 2021 and 2022 and the outlook remains challenging. Despite being in operation for almost two years, SCARP appointments remain low. The process accounted for just 2% of all business failures in the past quarter.

There has been a 33% increase in insolvencies in the year-to-date compared to the first three quarters of 2022.

Since the beginning of 2023, there have been 468 insolvencies—a 33% increase from the 352 insolvencies recorded in the first three quarters of 2022. Having analysed quarterly figures since 2021, Q4 has historically been the busiest quarter. We therefore expect the total number of insolvencies for 2023 to be in the region of 650.

Insolvencies in Q3 2023 are 48% higher than Q3 2021 and 1% higher than Q3 2022. However, Q3 2023 is 16% lower than the previous quarter.

Q3 2023 recorded 145 corporate insolvencies. This is an increase of 48% since Q3 2021, when 98 insolvencies were recorded. When comparing this quarter with the same quarter in 2022, there has been a very slight increase of 1% from 143 insolvencies in Q3 2022 to 145 insolvencies in Q3 2023. There has also been a 16% decrease since Q2 2023, when 172 insolvencies were recorded.

Monthly failures have been broadly increasing since the beginning of 2021, but August has seen a downward trend.

Overall, monthly business failures have generally been on the increase since early 2022. November 2022 saw the highest monthly insolvencies since the beginning of 2021, with 73 registered. July (Q3 2023) also had significant insolvencies with 65. However, August and September showed a decline. This is in line with patterns experienced in 2021 and 2022.

In operation for nearly two years, SCARP appointments remain low (two in total for Q3 2023), with SCARP accounting for less than 2% of all insolvencies during the past quarter.

SCARP appointments remain relatively low, accounting for less than 2% of all business failures in Q3 2023. It has been almost two years since SCARP was enacted, and there have been only 40 appointments.

Five ways to optimise your company’s cash culture

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 the business’s operations make daily decisions that impact cash. Put cash at the top of everyone’s agenda.
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.
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.
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).
Optimise supplier and customer working capital terms and relationships
This will help conserve and generate the cheapest form of cash available to you.