Reseller casualties continue to ease

Graydon figures suggest just 64 resellers hit the wall in Q1, compared with 89 last year

The downward trend in UK reseller insolvencies has continued into the first quarter, according to Graydon UK.

Just 64 resellers hit the wall in the first three months of 2013, the credit reference agency reckons, down dramatically on the 89 firms that fell over in Q1 2012.

Reseller insolvencies were running at close to 100 a quarter in 2011, propelling the annual total to its highest level since 2002. The carnage eased somewhat last year, with just 57 resellers going under in the final quarter of 2012.

Voluntary liquidations made up the brunt of the casualties in Q1, with 45 resellers going down this route. There were also four compulsory liquidations and 15 receiver-appointed insolvencies, Graydon said.

Laurie Beagle, divisional director at insolvency practitioner P&A Receivables Services, said he too had noticed a drop off in the insolvency rate as those left standing increase communication with their suppliers.

"Those that are left are stronger and are becoming more transparent with their suppliers and credit insurers, so they are getting more support," he said. "There are still going to be businesses hanging on by their fingertips but there are fewer of them."

Q1 may have seen the biggest-ever reseller bankruptcy in the form of 2e2 - which had about 1,500 UK staff - but Beagle said suppliers have taken lessons from its collapse.

"If you've got your nose too close to the glass, sometimes you can't see anything. If you stand back you can see the bigger picture," he said. "The signposts are always there it is just recognising those and sometimes there has been a level of complacency there."

Eddie Pacey, managing director of EP Credit Management, said that Graydon's figures ignore several types of business insolvencies, including corporate voluntary arrangements.

"Having said that consider the figures provided," he said. "While Q1 2013 is down on Q1 2012 in terms of overall numbers, it is only a decrease in administrative receiverships and compulsory liquidations that create the reduction. Also, looking at prior Q1s we see lower values recorded in 2005, 2006 and 2007, periods which we know preceded the collapse of banking and triggered the recession.

"Insolvency will always be evident - it's a part of doing business but one should never praise or criticize positive or negative movements and never consider such statistics as alternative measures of overall corporate health."