Fears that business insolvency figures will continue to rise

Anil Stocker
Co-founder at MarketInvoice
Visit website

Post date: Friday, 3rd February 2012

Today, the Department for Business, Innovation and Skills released its latest insolvency statistics revealing that an increasing number of businesses are falling into administration.

The latest down-beat figures showed that there were a total of 4,260 business insolvencies in England and Wales in the fourth quarter of 2011, representing an increase of 0.4% on the previous quarter and an increase of 7.2% on the same period in 2010.

Compulsory liquidations are rising particularly fast with 1,389 compulsory liquidations in Q4 which are up 14.1% on the previous quarter and up 16.1% on the corresponding quarter of the previous year.

These latest figures draw attention to the current challenges facing UK businesses and will only add to mounting concern that the UK is heading into a double dip recession this year.

As this prospect looms, the key issues for businesses will continue to centre around managing cash-flow, ensuring efficient supply-chains and dealing with reduced profit margins.

Cash-flow problems are a particular concern for the SME sector, and it is these companies that appear to be baring the brunt of insolvencies. The rise in insolvencies in the fourth quarter can partly be attributed to the Christmas period, where trading conditions were especially challenging as businesses paid for the majority of their stock upfront and their end customers failed to deliver payments on time.

Unfortunately, the outlook for businesses over the next quarter does not look set to improve.

It is already feared that the current cold spell will seriously affect businesses throughout the UK and on top of this, government cuts, high inflation rates and tough lending conditions will only add to the number of businesses insolvencies in the coming months.

Business Today