Encouraging news for businesses as insolvencies stay low in April

The latest Business Insolvency Index from Experian shows that the business insolvency rate has stayed at the relatively low level of 0.08 percent for a whole quarter now – the first time since 2007 – suggesting a more stable trading environment and increased resilience to business failure.

There has been a steady improvement over the last two years, with the average insolvency rate over the last 12 months standing at 0.08 percent, compared to 0.09 percent for the 12 months to April before that.

Looking at insolvencies by company size, businesses at both ends of the scale experienced low insolvency rates in April. Companies with 1-2 employees remained low at 0.06 percent – the same rate seen in March this year and April of 2012.  In addition, the UK’s largest companies, those with 501 plus employees, saw a below average rate of insolvencies at 0.06 percent, falling from 0.12 percent last month and from the 0.08 percent recorded in April 2012.

There were also modest improvements from firms in the middle of the market in April, as companies with 26-50 employees saw their insolvency rate fall from 0.16 percent in April 2012 to 0.14 percent in April 2013. Firms with between 11-25 employees also saw improvements, with the insolvency rate dropping from 0.17 percent in April last year to 0.16 percent in April this year.

Max Firth, managing director, Experian Business Information Services, UK&I says we’ve seen that the insolvency rate has been decreasing for some time, but the fact that it is staying low is encouraging news: “It’s particularly pleasing to see that companies at both ends of the supply chain improving all the time. Small companies make up the lifeblood of the British economy, so it is good to see that they have relatively low insolvency rates.

“At the larger end of the scale, the big firms have a significant effect on the whole supply chain, so to see fewer failures is promising and will no doubt boost confidence in both customers and suppliers.”