Insolvencies not yet filtering into the economy, but this is what businesses must do to future-proof
Michael J M Reid March 31st 2026
Michael Reid, partner and insolvency practitioner at MHA, the accountancy and advisory firm
The title of a recent Hollywood Oscar winner – One Battle After Another – will resonate with many Scottish business leaders.
Companies are still having to navigate sustained cost pressures, from increased employer National Insurance contributions and higher wage costs to ongoing rates challenges. This is set against wider geopolitical uncertainty, including developments in the Middle East and the resulting impact on energy prices.
"The effects are already being seen in parts of the retail and hospitality sector, where these cost challenges are forcing difficult decisions."
We don’t need to look far for a notable recent example: BrewDog, founded in Aberdeenshire. Its bar division entered a pre-pack administration, resulting in the closure of 38 bars and 484 redundancies. While elements of the brand and brewing operations have been preserved, the outcome highlights the challenges for customer-facing operations in the current environment. In addition, another Scottish brewer, Perth-based Innis & Gunn, was acquired earlier this month after entering administration.
The Insolvency Service’s most recent figures for February 2026 show there were 98 company insolvencies registered in Scotland, 5% lower than in February 2025. The total comprised 50 creditors’ voluntary liquidations (CVLs), 39 compulsory liquidations, six administrations, two receivership appointments and one company voluntary arrangement.
While these figures do not, in isolation, indicate a clear underlying trend, there is a growing sense that many businesses are experiencing the cumulative impact of repeated blows to the body, as rising costs and tightening cash flow begin to test their ability to stay on their feet.
Over the past five weeks, a series of insolvencies across Scotland has highlighted growing financial difficulty across businesses of all sizes. The liquidation of a Central Belt transport firm, following a winding-up petition from HMRC, is one of several recent cases, alongside the closure of an Edinburgh restaurant over tax liabilities, with all staff made redundant, the collapse of a Dundee courier firm with the loss of all jobs, and a long-established East Kilbride family engineering business entering liquidation after four generations of trading.
Taken together, these developments point to mounting pressures stemming from cash flow, rising tax burdens and tightening margins, with HMRC enforcement increasingly acting as the tipping point for businesses already under strain.
In this context, what can business owners do to limit the impact?
- Understand your cost base You cannot manage what you have not measured. Businesses should assess the proportion of energy within their overall cost structure to understand how price changes will affect performance.
- Tighten the cash cycle Survival depends on the speed of cash flow. Shorten invoicing cycles where possible and carefully manage payment terms. Maintaining a contingency reserve is increasingly important to absorb short-term volatility.
- Review supply chains Sustained high fuel costs are prompting many businesses to localise where possible. Assess logistics for unnecessary or ‘empty’ miles and consider whether suppliers can be better aligned geographically.
- The ‘no-surprises’ pricing rule Use a ‘drip’ approach to price increases for customers. Incremental shifts are easier for a loyal customer base to accept, rather than a blanket or significant hike.
- Understand your customer As the purchasing power of customers declines, consider changing your offering. If demand for luxury and high-end products is in decline, the offering should evolve accordingly.
Advisory support is a consistent part of business growth and development; however, its value becomes particularly evident when conditions begin to place pressure on leadership teams.
At such points, a pragmatic and measured approach is required to help businesses navigate emerging challenges and maintain a clear path towards stability and future growth.
