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Poor management at the root of one-in-five business failures

Poor or inexperienced management was responsible for swelling the jobless total by around 70,000 in 1996/97, despite the economy experiencing near boom conditions.

The umbrella body for receivers and liquidators in the UK, the Society of Practitioners of Insolvency (SPI) has found that of 230,000 jobs put at risk through company collapses in the period, around a third were due to poor management.

The SPI's seventh company insolvency survey shows management-related factors were the main cause of failure in about 4,000 of the 15,783 company collapses in the period covered.

Even more worrying, according to Brendan Gilfoyle, SPI president, is that failures due to poor cash flow and lack of working capital have risen rapidly. They now account for just over a fifth of failures, up from 16 per cent in the previous 12 months.

Mr Gilfoyle added: "I am certain better cash-flow management skills among managers would create fewer insolvencies and a healthier economy."