The first quarter of 2011 had the highest number of insolvencies in a year
The latest research from the Insolvency Service has revealed that the number of company insolvencies in the first quarter of 2011 increased compared to the previous quarter and the corresponding period in 2010.
There were 4,121 compulsory liquidations and creditors’ voluntary liquidations (CVL) in total in England and Wales in Q1. This was an increase of 3.7 per cent on the previous quarter and an increase of 2.1 per cent on Q1 2010.
Compulsory liquidations were down by 10 per cent on Q4 2010, whereas CVLs were up by 10 per cent.
Following the bad weather conditions and the VAT rise at the beginning of the year, consumer confidence is down and the threat of a double dip recession has affected businesses across the board.
This economic climate has encouraged an increased number of firms to take out a credit insurance policy to ensure trade at home and overseas is safeguarded from bad debt.
Lloyds TSB Commercial Finance’s head of debtor insurance, Martin Walmsley, advises businesses to be cautious but to remain optimistic.
“Firms may see these latest figures and feel down-heartened about trading conditions. However, we have seen businesses across many sectors successfully capitalising on opportunities to grow in Q1.
“It is vital companies wishing to expand take all the necessary precautions to avoid insolvent or late paying customers having an adverse affect on cash flow.
“Therefore, a credit insurance policy, like Lloyds TSB Commercial Finance’s debtor insurance, is ideal as it covers up to 90 per cent of bad debt suffered.”