Rate of business insolvencies slows

17 May 2010

17 May 2010 | Lindsay Clark

The number of businesses being declared insolvent fell by 20 per cent in the past year, according to research from credit data firm Experian.

In April 2010, 1,818 firms went out of business, compared with 2,274 in April 2009.

Rolf Hickmann, managing director of pH, an Experian company, said: “Our analysis shows that it continues to be vital for businesses to understand the circumstances of those they are doing business with and the risks they could expose their company to.”

While very small and large businesses avoided the worst rates of insolvencies, it was medium-sized firms that were hit hardest, Hickmann said.

“It is easier for the smallest businesses, with just one or two employees, to make adjustments to their operations and pull in the reins when times are challenging. For the largest business, there is the flexibility that comes with economies of scale, so insolvency rates among these extremes of business type are also low. Mid-sized businesses do not typically have the luxury of either of these benefits and can face the most pressure.”

The North East experienced the highest rate of insolvencies for three consecutive months up to April 2010, with 0.13 per cent of businesses going bust there. In April 2010, the insolvency rate in Yorkshire and the West Midlands was also 0.13 per cent, and the national average was 0.10 per cent.

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