Small firm insolvencies decline in last 12 months

27th August 2013 | News

Businesses with up to two employees, more than 1.5 million small companies in the UK, have experienced a considerable drop in insolvencies year-on-year, from 0.07 per cent in July 2012 to 0.06 per cent in 2013, according to new research.
Firms employing two people or less represent more than 1.5 million small companies in the UK.
The overall business insolvency rate declined from 0.08 per cent in July from 0.09 per cent in July 2012, representing the third successive month that the rate has fallen year-on-year, according to the study by Experian.
Although the rate is marginally higher than in June – when 0.07 per cent of the business population failed – the longer term trends indicate a steady and continued decrease in insolvency rates.
Max Firth, managing director of Experian UK & Ireland, said: "A whole quarter of dropping insolvency rates is really positive news, but the fact that larger companies have seen quite a rise shows that we are not out of the woods yet, especially as this can trickle down the supply chain to smaller companies.
"Business owners need to remain vigilant and ensure that they have monitoring systems in place, however simple, to ensure they know the financial status of their customers and their suppliers and are able to act quickly if one of them gets into difficulty."
Across the country, numerous regions experienced lower insolvency than the same month last year. Insolvency rates declined or stayed the same in nine out of 11 regions compared to July 2012, with Yorkshire and the West Midlands showing the biggest year-on-year improvements.
Scotland maintained its impressively low insolvency rate of just 0.03 per cent for the eighth month running. Only businesses with up to two employees in London and the South East registered a slight increase in their insolvency rate.