An increasing number of firms have seen profits decline to such an extent that they exist merely to pay off their debts and survive. Is the UK overrun with ‘zombie businesses’?
There are currently 52 UK based accountancy and bookkeeping companies posting growing losses and, despite the obvious freeze in the credit markets, increasing their debts, according to the latest Plimsoll Industry Analysis study.
These so-called ‘zombie businesses’ are carrying debts at an average of 63% of turnover, existing simply to service their out of control liabilities. Many are also using their suppliers to finance their growing losses, taking twice as long as to pay their bills as the industry average of 44 days.
David Pattison, author of the study, explained: “They are f...