Micro businesses lead the way as business payment performance continues to improve

 

news release

Contact:

Ms Serj Heera

0115 992 2773/07837 652169

serjeet.heera@uk.experian.com

 

February UK business insolvencies down 15 per cent year-on-year

Financial strength continues to see small improvements

 

Nottingham, 22 March 2010 - The latest Insolvency Index from Experian®, the global information services company, has revealed a year-on-year fall in business insolvencies during February.

 

The total number of insolvencies fell by 15.1 per cent during February compared to the same month last year - from 2,160 in February 2009 to1,834  in February 2010 – bringing the rate of insolvencies down from 0.11 per cent to 0.10 per cent.

 

In comparison to the insolvency rate recorded in January (0.08 per cent), it was an increase.  However, January has in previous years been a quiet month for insolvencies and despite the January to February increase, it still follows an overall downward trend.

 

The overall financial strength score[1] of UK businesses continued to improve, from 79.76 in February 2009 to 81.18 in February this year.  The score also saw a small month-on-month improvement from 81.16 in January.

 

Rolf Hickmann, Managing Director of pH, an Experian company, said: “Small businesses have far more flexibility than any other business type.  It is easier for smaller businesses, with just one or two employees, to easily make adjustments to their operations and pull in the reins when times are difficult.  For larger business, there is the security that comes with size and a well established structure, so insolvency rates among these business types are also low.

 

“However, mid sized businesses, which are seeing the highest rates of insolvencies, are too large to be flexible and too small to rely on a strong and established structure.”

 

Other key highlights include:

  • Although the North East region saw the highest rate of insolvencies, it was also one of two regions to see the highest improvement, from an insolvency rate of 0.20 per cent in February 2009 to 0.15 per cent in February 2010.  The other region to see the biggest year-on-year improvement was Wales (from 0.14 per cent to 0.08 per cent).
  • The Greater London region continued to be the region where businesses had the lowest financial strength score compared to other regions.  However, it was also the region to see the biggest year-on-year improvement from 78.11 in February 2009 to 79.99 in February 2010.
  • The largest companies, those with 501 or more employees, saw the greatest improvement year-on-year in the insolvency rate (from 0.20 per cent in February 2009 to 0.10 per cent).
  • The smallest businesses (with 1 to 2 employees) saw the most improvement in their financial strength scores – from 80.50 in February 2009 to 82.48 February 2010.
  • The financial strength of businesses in the IT industry rose from 80.61 in February 2009 to 83.60 – the biggest improvement compared to other sectors.
  • Businesses in the oil industry held the highest financial strength score during February – 86.31.

 

Region

Insolvencies Feb 10

Insolvencies  Feb 09

% of business population failing Feb 10

% of business population failing Feb 09

Financial Strength

Score Feb 10

Financial Strength

Score Feb 09

Scotland

          107

            88

0.09

0.08

     81.09

     80.65

North East

            58

            81

0.15

0.20

     81.28

     79.59

North West

          245

          290

0.13

0.16

     80.63

     79.32

Yorkshire

          156

          206

0.13

0.16

     81.26

     79.44

Wales

            45

            77

0.08

0.14

     80.76

     79.30

West Midlands

          155

          197

0.10

0.12

     80.09

     78.84

East Midlands

          104

          155

0.10

0.14

     81.56

     79.97

Eastern

          144

          221

0.08

0.13

     82.20

     81.00

South West

          127

          137

0.08

0.09

     82.77

     81.75

Greater London

          452

          428

0.09

0.09

     79.99

     78.11

South East

          241

          280

0.08

0.08

     82.40

     81.16

Grand Total

       1,834

       2,160

0.10

0.11

     81.18

     79.76

Source: pH, an Experian company

 

Number of employees

Insolvencies Feb 10

Insolvencies  Feb 09

% of business population failing Feb 10

% of business population failing Feb 09

Financial Strength

Score Feb 10

Financial Strength

Score Feb 09

1-2

          252

          235

0.06

0.06

     82.48

     80.50

3-5

          298

          364

0.14

0.15

     82.09

     81.91

6-10

          278

          311

0.22

0.23

     81.46

     81.06

11-25

          231

          326

0.23

0.31

     81.02

     81.12

26-50

          109

          130

0.23

0.27

     80.57

     80.82

51-100

            48

            59

0.18

0.21

     80.13

     80.35

101-500

            44

            63

0.17

0.23

     81.20

     81.47

501+

              9

            19

0.10

0.20

     84.20

     84.77

Unspecified

          565

          653

0.06

0.06

     80.40

     78.50

Grand Total

       1,834

       2,160

0.10

0.11

     81.18

     79.76

Source: pH, an Experian company

 

Sector

Insolvencies Feb 10

Insolvencies  Feb 09

% of business population failing Feb 10

% of business population failing Feb 09

Financial Strength

Score Feb 10

Financial Strength

Score Feb 09

Extractive Industries

              2

              1

0.13

0.07

     82.76

     82.34

Oil

              4

              1

0.12

0.03

     86.31

     84.78

Building and Construction

          310

          370

0.19

0.23

     77.98

     77.66

Building Materials

              8

              8

0.21

0.21

     79.50

     79.85

Chemicals Industry

              3

              9

0.11

0.30

     81.34

     81.46

Diversified Industrials

            39

            53

0.18

0.23

     78.25

     78.31

Electricals

              8

            15

0.09

0.17

     79.38

     79.44

Engineering

            64

            79

0.17

0.20

     79.32

     79.64

Printing, Paper and Packaging

              5

              7

0.20

0.27

     78.25

     78.99

Textiles and Clothing

            29

            38

0.22

0.26

     76.80

     76.51

Breweries

            -  

              1

0.00

0.21

     80.16

     79.85

Spirits, Wine and Tobacco

            -  

            -  

0.00

0.00

     82.10

     81.10

Food Manufacturing

              8

            11

0.16

0.22

     77.90

     78.16

Pharmaceuticals

              2

            -  

0.22

0.00

     81.35

     82.42

Wholesaling

            71

          108

0.11

0.16

     79.85

     79.57

Leisure and Hotels

          139

          139

0.17

0.16

     79.09

     76.76

Media

            65

            59

0.10

0.09

     80.87

     79.74

Food Retailing

            15

            16

0.11

0.11

     76.78

     77.84

Non-Food Retailing

          121

          170

0.14

0.20

     79.07

     78.41

Servicing/Repair

            11

            10

0.13

0.11

     82.27

     80.63

Transport

            65

            80

0.13

0.14

     78.46

     77.00

Utilities

              2

              1

0.10

0.05

     80.34

     80.15

Postal and Telecommunications

            11

            11

0.13

0.12

     76.37

     74.86

Agriculture, Forestry and Fishing

              7

            12

0.03

0.06

     85.41

     84.13

Banking and Financial Services

            58

            69

0.12

0.14

     84.63

     84.60

Health and Household

              1

              1

0.11

0.11

     79.51

     79.22

Business Services

          399

          463

0.08

0.08

     81.64

     79.98

Hiring and Leasing

            28

            32

0.21

0.24

     81.26

     79.37

Property

            95

          141

0.05

0.08

     83.48

     84.86

Other Services

            98

            94

0.05

0.05

     85.66

     84.19

Plastics & Rubber

            13

            23

0.23

0.39

     78.06

     78.55

Insurance

            12

              4

0.10

0.03

     84.76

     85.17

IT

            76

            67

0.07

0.06

     83.60

     80.61

Motor Traders

            30

            45

0.09

0.13

     79.95

     79.10

Unspecified

            35

            22

0.03

0.01

     74.17

     67.08

Grand total

       1,834

       2,160

0.10

0.11

     81.18

     79.76

Source: pH, an Experian company

 

ENDS



[1]The financial strength score predicts the likelihood of a business failing in the next 12 months, with 100 being the least likely to default and 1 being the most likely.

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