Small companies standing firm in face of insolvencies

Latest Insolvency Index reveals a 0.55 per cent drop in business failures, with smaller companies leading the way

SMEs and micro businesses are bucking the insolvency trend, according to the latest figures from market watcher Experian.

The most recent Experian Insolvency Index reveals that 1,808 UK firms went bust in April this year, a 0.55 per cent drop on the same period in 2010 when the figure was 1,818.

Failures fell at a faster rate across the majority of smaller business segments, with the most notable reductions among organisations with three to five employees, Experian claimed.

The figures point to a continuing, albeit slow economic recovery after Experian revealed in January that business failures fell in 2010 for the first time in two years.

In medium-sized firms (101 to 500 employees), failures increased by 4.4 per cent year on year, and large company insolvencies (501+ employees) rose by a more significant nine per cent.

The biggest improvement in business failures was recorded in the Midlands and Wales. A 19 per cent drop in insolvencies was seen in the West Midlands, and a 17.5 per cent drop in Wales.

The East Midlands saw a significant 36 per cent fall in the number of insolvencies. Elsewhere in the east, south-east and north-east of England, failures increased by 26.1 per cent, 14.6 per cent and 13.7 per cent respectively when compared with the previous year.

Max Firth, managing director of business information services at Experian UK and Ireland, said: “With business failure rates and financial strength fluctuating across different regions and sectors, it is especially important that any organisation extending credit to or relying on other businesses for goods and services is able to understand the level of risk associated with their commercial partners.”