Company insolvencies increased by 2.2% in the autumn
An estimated 3,633 companies entered insolvency in the third quarter of this year. That was increase of 2.2% on the previous quarter and a 1.1% increase on the third quarter of 2015.
The figures were released by the Insolvency Service, which says the trend in case numbers has been fairly flat over the last year, following a generally declining pattern between 2011 and 2015.
The autumn increase was driven mainly by rise in creditors’ voluntary liquidations. There were an estimated 2,569 cases, an increase of 5.2% on the previous quarter and 2.2% higher than in the autumn quarter 2015.
There was a decrease in the number of compulsory liquidations. There were 632 in total, a fall of 4.5% compared with the previous quarter.
Blair Nimmo, UK head of restructuring at the financial services company, KPMG, told Credit Today: “The good news is that the predicted post-referendum spike in insolvencies hasn’t materialised, as companies refused to panic in the immediate aftermath of the vote, but instead adopted a ‘wait and see’ attitude.
“Many sought to keep up those good habits developed in recent years regarding keeping a close grip on cash and cost which has left them in good stead.
“However, we shouldn’t be naïve to the fact that this period of relative stability may not be here for the long term.
“There undoubtedly will be some companies who are already feeling the pinch due to the significant fall in the value of sterling, while others will be looking nervously towards their supply chains.
“Added to this are pressures unrelated to the referendum, such as increases to the Living Wage and movement in oil prices.”
The uncertainty over Brexit and the falling pound may cause problems for many firms over the coming months. Firms should ensure they keep a tight control over credit and debt collection. Early action to ensure prompt payment of overdue invoices can prevent major problems developing in the longer term.
Please contact Gavin O'Donovan if you would like help with credit control or debt collection.