Business insolvencies in September fall

The number of business insolvencies in September 2012 has revealed a 3.1 per cent drop, according to Experian.



Smaller firms, all those falling into the categories of between 1 and 50 employees, saw the greatest improvement in their average insolvency rate compared to September 2011.

This was led by firms with 26 to 50 employees that saw their insolvency rate fall from 0.23 per cent to 0.19 per cent, while firms with 6 to 10 employees saw their insolvency rate fall to 0.13 per cent, the lowest since January 2011.

The only year on year increase in insolvency rates came from larger firms; all those with between 51 to 500 employees.

"Overall insolvency figures are down and the picture remains stable, which is encouraging" said Max Firth, Managing Director at Experian.

"In addition, we’ve seen real pockets of improvement, such as in the West Midlands and South West, which have both seen a drop of over 30 per cent."

"Also encouraging are the lower rates of insolvencies among some of the small firms. However in contrast, larger firms experienced a slight increase in insolvencies, which may lead to smaller firms that were supplying to them, experiencing a knock on effect."

“This highlights the need for firms need to be prudent and consider their credit management practices in order to survive. Risk planning and monitoring their financial health and that of their customers and suppliers can make or break a business.”

The West Midlands falls to lowest rate since June 2007

Figures for the West Midlands showed the total number of insolvencies were down by 34 per cent in September 2011 to 0.07 per cent, hitting the lowest rate since June 2007.

The picture in the South West was also relatively good compared to the rest of the UK – with a fall in its insolvency rate from 0.09 per cent in September last year down to 0.06 per cent in September 2012. It also saw a fall from this August’s figure of 0.07 per cent.

In addition, Yorkshire and South East were the only regions to see an increase in insolvency figures on September 2011, with Yorkshire at 0.12 per cent seeing a 22.8 per cent increase in business insolvency rates and the South East is up 7.2 per cent to 0.08 per cent.

Sector view

Out of the top ten largest sectors in the UK, Building and Construction fared best, with a drop in the insolvency rate from 0.17 per cent in September 2011 to 0.14 per cent in September 2012– better than any other sector.