To make some sporting comparisons with the economic environment, in the year of the Winter Olympics are we going to continue to struggle on the slippery slopes or fan the flame of recovery?

In a World Cup year, are our expectations going to be lifted but ultimately turn to disappointment? And as our cricket team starts to re-build are we going to see some green shoots?

Certainly it would appear that business confidence is growing. According to the latest Business Distress Index from R3, the insolvency trade body, a record 68% of businesses are showing at least one key indicator of growth. Larger businesses show the most positive signs but it is also encouraging that 66% of firms with turnover between £50,000 and £1million reported at least one growth indicator, up from 51% in the summer.

A key area is that 44% of businesses are planning to expand in 2014 with 39% expecting to consolidate, suggesting a level of business confidence that has previously been missing and will hopefully lead to much needed investment.

Further encouraging signs are that the number of so-called Zombie businesses ? those only able to pay interest on their debts and not reduce the outstanding capital ? has fallen from a peak of 160,000 in November 2012 to 103,000. However, this equates to 6% of businesses with turnover in excess of £50,000 and so indicates a significant number of businesses still at risk.

There are also still many businesses that are having to negotiate payment terms with their creditors, particularly HM Revenue & Customs. There are indications that HMRC is requiring shorter timescales for repayment and also more frequently attending premises and levying distraint on goods.

There is also the danger of “over trading” and other factors to be wary of as we move into a period of recovery. Increased demand and the desire to take advantage of improving conditions puts pressure on cash flow which will need to be managed carefully. The current goodwill being afforded by creditors may disappear as they become more confident in pursuing debts and the consequences of a long period of under investment may be exposed. Whilst any interest rate rise is not imminent it is moving closer on the horizon and businesses should plan for such an increase.

As ever the key in exploiting the potential for growth and to safe guard against its potential threats is to seek professional advice so that your business can move forward in 2014.

: : Mark Upton is business recovery partner at Ensors Chartered Accountants.