Slowdown in small business sector failures

Date: 13th October 2008

There has been a significant levelling off in the number of British companies going insolvent, a new report has revealed.

Equifax's latest Business Failures Report shows that the services and wholesale sectors only saw minor increases in insolvencies of 4.2 per cent and 2.6 per cent respectively in Q3 2008.

The biggest casualty, according to the report, was the manufacturing sector, which was hit by a 13.8 per cent rise in company bankruptcy.

Neil Munroe, external affairs director at Equifax, believes there are reasons to be optimistic: "Whilst there is clearly immense pressure on businesses with increased costs all-round, it appears that some sectors have been taking the right precautions to manage cashflow."

He added that avoiding the risk of bad debt was a key factor in businesses being able to remain solvent, while also prediction that the Bank of England 0.5 per cent rate cut would be welcomed by the small company sector.

The Chairman of the AVN association last week stated that accountants need to play a "proactive" role in helping their clients fight the credit crunch.