Latest figures show that 22,148 businesses in Wales are in financial distress.
This is an increase of 40% since first quarter 2020, and just under a third of these businesses – 6,288 – are in Cardiff and Swansea.
UK-wide, there are 723,000 businesses in significant distress, up 42% year-on-year, with all sectors monitored by the research reporting an increase in financial difficulty
The findings are according to the latest figures from the independent insolvency firm Begbies Traynor.
Wales saw a 17% increase in the number of businesses struggling between Q4 2020 and Q1 2021.
And, in Wales, businesses in some sectors faced greater financial difficulty than others, including manufacturing and professional services, both increasing 28 percent between Q4 2020 and Q1 2021.
Commenting on the figures, Huw Powell, managing partner at Begbies Traynor across South Wales, said: “This huge increase in financially distressed companies in Wales shows that the last 12 months have undoubtedly been some of the hardest that many businesses have encountered.
"We must remember that this is no ordinary recession and while some businesses have had significant assistance from central government, large parts of the economy have had to function with their doors closed to their main source of custom.
“With the reopening of the economy over the next few months, there is a lot of work for many businesses to do, but those that have the talent to thrive in normal circumstances will find a way to adapt.
The pandemic has changed customer expectations and behaviours potentially permanently, and those businesses that were profitable pre-Covid-19, and can demonstrate a strong recovery plan, can survive.”
