Insolvencies down by 24 per cent compared to last year
Insolvencies are at a five year low, according to figures released by the Insolvency Service last week (5 November).
In England and Wales there were 13,907 bankruptcies in the third quarter of this year, down by nearly a quarter (24 per cent) on the same period last year.
The statistics comprised of 2,847 creditors voluntary liquidations, a decline of nearly two per cent on the previous quarter and 14 per cent on the equivalent period of last year.
Compulsory liquidations totaled 1,126, down by 3 per cent compared to Q2 2010 and by almost 13 per cent on the corresponding quarter in 2009.
If this trend continues, 2010 will have the lowest number of insolvencies for five years.
However, industry experts are advising businesses not to get complacent and continue to exercise caution when setting credit terms and chasing debtors.
Martin Walmsley, head of debtor insurance at Lloyds TSB Commercial Finance, said: “The current economic conditions, including low interest rates and policies such as HMRC’s Time to Pay, which allowed struggling businesses to defer tax payments, have helped the total number of insolvencies to drop.
“However, when interest rates start to increase and the public sector cuts come into full force, we may begin to see a rise in the number of insolvencies.
“I urge businesses across all sectors to remain cautious and seek advice immediately if they are worried about insolvency, either in their business or within their customer base.
"The failures of Connaught and ROK are stark reminders of the fragile state of some sectors of the economy. These unsecured creditors could have been saved by a policy such as Debtor Insurance from Lloyds TSB Commercial Finance, which safeguards a business against the risks associated with late payment and debtor failure.”