Tuesday, 17 July 2012

SMEs lead the fall in business insolvencies

The latest Business Insolvency Index from Experian has shown that during June, 1,650 businesses became insolvent, compared to 1,841 in May and 1,783 in June 2011.

SMEs with one to 100 employees were the only group to see improvements in their insolvency rates, with the biggest rise coming specifically from SMEs with 51 to 100 employees, from 0.19% in June 2011 to 0.12% in June this year.

Businesses with more than 100 employees experienced an increase in the rate of insolvencies compared to June 2011. Firms with between 101 to 500 employees experienced a 0.16% failure rate, compared to 0.08% in June last year, and businesses with more than 500 employees saw an increase in insolvency rate from 0.12% in June 2011 to 0.15% in June this year.

Max Firth, managing director of Experian Business Information Services in the UK and Ireland, said: “Although the overall figures for June show a fairly stable environment at the moment, led by smaller firms, the higher insolvency rate at the top end of the business world will have an impact on the supply chain. Many smaller suppliers, unless they have a good credit management process in place, will find themselves short of a major customer and left with unpaid bills. They will need to move quickly to fill the gap in their customer base.

“When taking on new business, it is vital they start to monitor the health of both customers and suppliers. They can be forewarned of any issues and be in a better position to deal with the impact of another business’s failure.”

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