The latest Insolvency Index from Experian®, the global information services company, has revealed a year-on-year decline in business insolvencies during June. The overall financial strength score of UK businesses also improved, from 80.83 in June 2009 to 80.66 in June this year.
1,771 UK businesses failed during June 2010, 13.4 per cent fewer than in June 2009 when 2,044 firms became insolvent. As a result, the year-on-year insolvency rate fell from 0.10 per cent to 0.09 per cent in June.
At 0.14 per cent, the North East had the highest insolvency rate of the regions in June, with Yorkshire (0.12 per cent) close behind. In contrast, at the opposite end of the country businesses in the South West saw a UK low of 0.07 per cent, while Greater London had an insolvency rate of 0.08 per cent.
Rolf Hickman, Managing Director of pH Group, an Experian company, said: “June’s data indicates that the UK’s business community as a whole is stabilising, however it also points to the existence of a north versus south divide. Businesses in the north of England seem to be faring slightly worse than their southern counterparts across all industry sectors.”
“Although the data hints at some improvements, individual organisations are impacted in different ways. It is vital for businesses to understand the circumstances of those they are doing business with and the risks they could expose them to.”
Other key highlights include:
- Scotland was the only region of the UK to see an increase in the insolvency rate, up to 0.08 per cent from 0.06 per cent in June 2009
- As well as being the region with the lowest insolvency rate, the South West also held the highest financial strength score (82.50)
- Smaller companies with 11-25 employees saw the greatest year-on-year reduction in the insolvency rate (from 0.29 per cent in June 2009 to 0.20 per cent).
- The largest businesses with 501 plus employees suffered the most since last year, seeing the insolvency rate double from 0.07 per cent in June 2009 to 0.14 per cent.
- The smallest businesses (with 1 to 2 employees) were the only group to see an improvement in their financial strength scores – from 81.33 in June 2009 to 81.95 in June 2010.
- The financial strength of businesses in the transport industry rose from 75.98 in June 2009 to 78.20 – the biggest improvement compared to other sectors. This sector also saw its insolvency rate drop from 0.12 per cent to 0.07 per cent over the year.
- Businesses in the oil industry held the highest financial strength score during June (85.54)
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