Oct
31
2013

Insolvency rate falls for fifth consecutive month

By Max Firth, MD, Experian Business Information Services, UK & Ireland

September brought yet another month of falling business failures (the fifth in a row), and only insolvency practitioners would bemoan the fact that – with insolvency rates at 0.07% – more companies are surviving than at any point since 2007.

But look a little deeper into the figures and you’ll find interesting detail of what is happening to the health of UK plc.

Take large companies for instance. Failure rates amongst businesses with more than 500 people bucked the national trend and increase in recent months. In September they fell back to 0.10%.

Firms with 100 – 500 employees also performed better in September, with failure rates falling further to 0.09%. The insolvency rate for these mid-sized businesses has almost halved year-on-year. Another encouraging indicator in our data is improving rates of failure in key British industries.

  • Failure rates in the Building & Construction industry fell for the eleventh month running (to 0.11%), reflecting a more positive environment for house building.
  • Banking & Financial Services firms saw a large year-on-year fall in failure rates, from 0.15% to 0.10%.
  • The Leisure & Hospitality sector, a good bell-weather for consumer confidence, saw failure rates fall to 0.11%. Rates have not risen for this sector in more than a year.

The North East of England, an area hard hit by business failures in recent years, saw significant improvements in September. Although it remains the riskiest area to do business in the UK, failure rates have fallen by almost two-thirds on the year, from 0.32% in September 2012 to just 0.12% last month.

Yorkshire was the next most improved region, with failure rates falling from 0.12% to 0.09% year-on-year. There was some trouble in the East of England, with failure rates rising to 0.10%, yet this appears to be a blip against the continually improving national picture.

Despite the business environment seemingly becoming more benign, it remains vital for all businesses to careful scrutinise the financial performance of customers and suppliers. By keeping on top of the risks, businesses can help to ensure they protect their supply chain and get paid on time.


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