UK business failures hold firm

Despite the credit crunch, the number of UK firms hitting the wall increased just 3.2 per cent between Q1 and Q3

Insolvency Service building

The number of UK firms going bust has risen only slightly over the course of the year, new figures from Equifax reveal.

The credit information giant said that, despite the credit crunch, firms in many sectors are taking the right precautions to manage cashflow and avoid the risk of bad debt.

Equifax said the number of firms that hit the wall in Q3 was up just 3.2 per cent on Q1.

While some sectors, including manufacturing, saw a large increase in business failures (+13.8 per cent), others, such as services - which includes the IT sector - have seen a fall in failures (-4.2 per cent).

The increase when compared to Q2 is more sizable at 7.1 per cent, and Equifax said conditions remain tough.

Neil Munroe, external affairs director at Equifax, said the recent 0.5 per cent cut in the base rate would be a “welcome lifeline for businesses in all sectors”.

“Although business failures continue to rise and there are a number of external factors that can hit even the most well prepared business, there are indications that firms in some sectors are taking the right precautions to protect themselves from some of the risks in tough trading conditions,” he said.

“Businesses need to continue to use rigorous credit checks, alongside ongoing monitoring of the financial status of their customers and suppliers. By operating best practice and harnessing the power of the latest risk management solutions, firms can minimise the threat of bad debt and secure the future of their business.”