Firms warned that fall in insolvencies may be just temporary blip
The number of corporate insolvencies fell by 12% in the second quarter of this year, according to the Insolvency Service.
While the figures are to be welcomed as a much-needed improvement, the trade body R3 fears they may only be a temporary blip in a continuing upward trend.
It’s urging business owners not to be lulled into a false sense of security, pointing out that corporate insolvency figures are still 12% higher than the same quarter last year, and that company directors still need to remain vigilant to help safeguard their businesses.
A spokesman said: “While the dip in corporate insolvency numbers in the last quarter may surprise some, it is just one quarter. Insolvency numbers have bounced around from quarter to quarter in recent years, and the underlying trend remains slightly upwards.
“The current dip could be explained by the fact that corporate insolvencies often receive a bump in January to March as company directors take stock of their situation ahead of the end of the financial year.
“All businesses are facing a range of pressures. Sluggish economic growth isn’t helping, while staff costs for many are greater than a year ago following April’s increases in the National Living and Minimum Wages, with pensions auto-enrolment expenses also part of the picture. Business rates rises continue to be cited as a reason for business struggles, too.
“The sooner any businesses facing problems seek advice from a qualified and professional adviser, the more options they will have to turn themselves around.”
In light of the continuing economic uncertainty, businesses should ensure they keep a tight rein on credit control and debt collection.
It’s important to pursue unpaid invoices early, as delay could mean a debtor going out of business before you have the chance to pursue them for money owed.
Please contact Neil O'Callaghan if you would like help with credit control and debt collection.