The rate of business insolvencies in the UK is slowing down, research by Experian shows.
The average financial strength score – which predicts the likelihood of a business failing in the next 12 months, with 100 being the least likely and 1 being the most likely – for businesses in Great Britain rose from 79.46 in January 2009 to 81.37 in December 2009.
According to Experian, this has been helped by an overall improvement in the time it takes businesses to pay their suppliers.
“In 2009, businesses in Great Britain managed to climb back to a better place financially,” said Rolf Hickmann, managing director of pH, the Experian company that conducted the research.
The research showed that in 2009, the businesses most successful at avoiding insolvency were the very smallest and the very largest ones, with the highest insolvency rates among mid-range businesses.
“Many more businesses are taking steps to protect themselves from the risks of not getting paid, the impact on them if a key supplier or customer goes but, and indeed the risk of insolvency within their own businesses.
“With this in mind, businesses need to not only proceed with caution when it comes to both new and existing business clients, but also ensure that their own house is in order, so that they themselves are appealing prospects for business.”
Jason T Hesse