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Fall in Business Insolvency Rates

Business insolvencies are at the lowest levels since 2005, according to a recent report from PwC. The report showed that less businesses are failing at the start of 2013 than previously, showing that more companies are beating the low confidence, stagnant economy and keeping ahead of the game.

In total, there were 3,285 insolvencies in the first quarter of 2013, a decrease from 3,657 in the final quarter of 2012 and a significant reduction on figures from Q1 of 2012, when 4,412 businesses failed. Administrations also fell by nearly a third, from 724 in Q1 2012 to 490 in 2013. Company Voluntary Arrangements (CVAs), which allow an insolvent company to reach a voluntary agreement with creditors, dropped to 104 cases – the lowest level for ten years. Looking at consecutive quarters, construction, retail and manufacturing are still the hardest hit sectors when it comes to insolvencies – showing there’s still a lot of work to be done.

This all shows that conditions are improving for businesses despite the shaky outlook for the UK economy. However, it also reflects the difficulties being faced by a number of sectors such as retail – there’s still a downward trend that needs to be reversed.

PwC has commented that this drop in administrations below 500 for the first time since 2005, which alongside other insolvency processes, is suggesting early signs of economic recovery. It also shows that there could soon be a rise in business confidence on the horizon. There is now a challenge for UK businesses to work out how to grow in an economy that’s still almost flat-lining.

Could the answer be alternative lending? If your business needs help to manage cash flow and late payment problems, both of which can lead to company failure, then invoice finance could help – it’s a flexible, accessible and efficient way to boost your business with an injection of working capital.

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