Despite the continuing recession, small business insolvencies have reduced significantly in the month of June compared to June 2011 according to Experian. There was an overall fall of 6.1% in the insolvency rate for all businesses in the UK. Although we are only looking at one month, the year on year statistics tend to be the most telling. These figures are good news for UK plc.
Insolvency Rate Breakdown by Region
North West down 11%
South East down 20.7%
Wales down 12.1%
London down 11.6%
West Midlands up 18%
West Midlands is obviously the odd one out but it may be because the insolvency rate for larger companies employing in excess of 100 people has gone up from 0.08% to 0.16% so 50%. If these companies were based in the West Midlands then it will skew the statistics.
Max Firth, managing director for Experian Business Information Services UK and Ireland, said: “Although the overall figures for June show a fairly stable environment at the moment led by smaller firms, the higher insolvency rate at the top end of the business world will have an impact on the supply chain."
So if we stripped out the larger companies from the statistics it shows a considerable fall in the insolvency rate amongst smaller firms.
The reasons for this fall in insolvency appear to be that HMRC are not putting much pressure on smaller businesses at the moment as they concentrate on tax evasion and are somewhat under resourced. However, this will no doubt change as the pressure to collect in tax increases again in the autumn. Larger businesses are being put under pressure by their banks that have the power to call in the administrators to protect their position.
So what should you do if you supply a business that goes into administration. Click on the link to find out.