The first three months of 2012 have shown that company failure rates have significantly fallen compared to the same period in 2010. This shows that while there’s still plenty of doom and gloom surrounding the economic climate, recovery is still possible – if small businesses tackle cash flow and late payment issues.
Company failure rates are nearly 20% lower than this time two years ago. The number of insolvencies is also down compared to this time last year by nearly 4%. The obvious up side is the decreased number of company failures. With big name high street stores going under, it’s clear that not only small businesses are at risk.
The number of insolvencies in the manufacturing sector has also slightly decreased, following a peak at the end of 2011. Government initiatives such as ‘Made in Britain’ and ‘Going for Growth’ are playing a big part in this, helping to rebalance the economy and manufacturing in the UK.
There has also been a decrease in comparison to the last three months of 2011, which does suggests that liquidations will continue to decrease this quarter. This gives some optimism, but there are still obstacles for struggling small businesses to overcome.
Obstacles to Growth
However, although this shows that the risk of a double dip recession are perhaps receding, it’s still important for businesses to be aware of all the risks and opportunities that are still out there. If SMEs want to keep afloat, business owners still need to find ways to increase their efficiency, cash flow and boost their bottom line.
There are government initiatives and support available for small businesses in need of help. However, it’s often necessary to look into alternative finance solutions such as asset based finance to help keep cash flow healthy, especially when it comes to late payment problems.