Experian: Larger firms continue to buck insolvency trend

Market watcher's latest report reveals a fall in the number of larger firms going bust in September, despite an overall rise in insolvency

The number of UK businesses going bust increased in September, but larger firms are still showing more resolve than expected, Experian has claimed.

Its latest Insolvency Index revealed that firms employing 501 or more experienced a year-on-year fall in the number of insolvencies during September – with 11 firms going to the wall last month, a 25 per cent drop on the same period in 2010.

The research backs its figures from July, which also showed a drop in the number of large firms going out of business.

However overall the number of firms going bust increased to 0.09 per cent in September, up from the 0.08 per cent in the same month last year.

The average financial strength score for UK firms fell for the seventh consecutive month, Experian claimed – dropping to 78.8 in September, compared with 81.05 in September 2010.

Conversely larger firms saw their financial strength score improve from 84.63 to 85.87. Micro businesses that employed just one or two people experienced the biggest annual rise in insolvencies last month, increasing by 25 per cent to 258. This represented 0.06 per cent of the UK’s total business population, Experian claimed.

On a geographical basis the North East of England saw the biggest drop in its failure rate according to Experian – dropping from 0.15 per cent to 0.13 per cent – but it still remained the region with the highest rate of insolvencies. Scotland maintained the lowest insolvency rate with 0.07 per cent, while the West Midlands saw the biggest rate increase from 0.08 per cent in September 2010 to 0.11 per cent in September 2011.

Max Firth, managing director of Experian Business Information Services in the UK and Ireland, said: “While larger businesses bucked the trend in September, our analysis underlines how important it is that companies understand the financial strength of their customers, suppliers and business partners. This kind of accessible and valuable insight can make all the difference to a business of any size.”