Experian urges buyers to be alert

18 July 2011

Big firms perceived to be late payers

 

Business failures worse than a year ago


Overdue bills continue in the UK


Councils concerned about suppliers' financial robustness


Big rise in insolvencies and

administrations at the end of 2008

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18 July 2011 | Angeline Albert

UK companies may be performing better, but buyers must remain vigilant in monitoring suppliers to avoid negative exposure from companies going bust.

According to Experian’s latest insolvency index, the number of business failure rates in June dropped for mid-sized companies in England, Scotland and Wales, when compared to the same month a year ago.

The rate of failure among companies with 101-500 employees fell by more than half in June, when compared to the same month in 2010, dropping from 0.17 per cent to 0.08 per cent.
However, Experian warned purchasers to be aware of possible risks.

Max Firth, managing director for business information services at Experian, said: “Although the data shows improvements in some regions and sectors, individual organisations feel the impact in different ways. It is vital for businesses to understand and monitor the circumstances of those they are doing business with and the risks they could expose them to.

The largest companies have experienced a turnaround in fortunes and now the larger mid-sized businesses are following suit, with a significant improvement since last year.”

The East Midlands was the most improved region in June 2011, with the failure rate dropping from 0.11 per cent in June 2010 to 0.09 per cent. The South West had the lowest rate of failures, with just 0.07 per cent of the business population becoming insolvent last month. In contrast, companies in the North West and Scotland experienced a rise in insolvencies.

Some sectors fared better than others. The building materials industry had the highest rate of failure at 0.27 per cent, followed by building and construction, with a rate of 0.18 per cent.

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