Region sees fall in number of business insolvencies

YORKSHIRE was the only region to see its rate of business insolvencies fall in May, compared to a year previously, according to new statistics from information services firm Experian.
By The Newsroom
Published 25th Jun 2012, 07:00 BST

The region saw 136 firms, 0.11 per cent of the business population, fail during May this year, a stark contrast to May 2011 when it scored the highest rate held by any region of 0.13 per cent, the business insolvency index showed. This represented a 9.3 per cent decline on last year.

Nationally, the UK-based survey showed that 1,841 firms, representing 0.09 per cent of the total business population, failed during May – the same rate as May 2011, and a slight increase on April 2012’s figures, driven primarily by small businesses with up to 25 employees.

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Max Firth, UK managing director for Experian’s business information services division, said that by the time a firm grows to six to 10 employees, the flexibility it benefited from as a micro business begins to disappear. He added: “Fixed overheads become greater and cash flow starts to cause more serious issues if not carefully monitored.”

Companies with six to 10 employees saw their insolvency rate increase from 0.17 per cent in May 2011 to 0.20 per cent in May 2012. This represents the first time, since Experian began sharing monthly business insolvency analysis in 2007, that firms in this size band had experienced the highest rate of insolvencies.

Mr Firth said: “Our data has shown that historically, the highest insolvencies have consistently been experienced by firms that have between 10 and 100 employees. If a good credit management process is not implemented before reaching this size, then a firm may find it significantly harder to keep its head above water as it grows.”

Four UK areas saw an increase in their insolvency rate from May 2011 to May 2012 – the North East, Scotland, Eastern and the South West. The North East experienced the highest increase in rate of business insolvencies from 0.09 per cent in May last year to 0.14 per cent in May 2012.

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Of the UK’s five biggest sectors, the property sector saw the biggest drop in its rate of insolvencies – from 0.09 per cent in May 2011 to 0.06 per cent in May 2012. Meanwhile, the non-food retailing sector saw an increase – 0.16 per cent of firms failed during May this year, compared to 12 per cent in May 2011.

In April, 132 businesses failed in Yorkshire, representing 0.11 per cent of the region’s business population.

Related topics:YorkshireNorth EastScotland