By Daniel Hunter
Data released today (Friday) by the Insolvency Service has revealed that fewer people were declared insolvent in 2011 in England and Wales than during the previous year.
However, the number of companies going bust increased. The figures show that 119,850 people were declared insolvent over the year, which was down 11.3% on the record high of 2010.
The number of firms going bust in 2011 increased by 1.3% compared with 2010.
“The latest down-beat figures showed that there were a total of 4,260 business insolvencies in England and Wales in the fourth Quarter of 2011, representing an increase of 0.4% on the previous quarter and an increase of 7.2% on the same period in 2010," Anil Stocker, Director and Co-founder of MarketInvoice said.
"Compulsory liquidations are rising particularly fast with 1,389 compulsory liquidations in Q4 which are up 14.1% on the previous quarter and up 16.1% on the corresponding quarter of the previous year.
“These latest figures draw attention to the current challenges facing UK businesses and will only add to mounting concern that the UK is heading into a double dip recession this year. As this prospect looms, the key issues for businesses will continue to centre around managing cash-flow, ensuring efficient supply-chains and dealing with reduced profit margins.
“Cash-flow problems are a particular concern for the SME sector, and it is these companies that appear to be baring the brunt of insolvencies. The rise in insolvencies in the fourth Quarter can partly be attributed to the Christmas period, where trading conditions were especially challenging as businesses paid for the majority of their stock upfront and their end customers failed to deliver payments on time.
“Unfortunately, the outlook for businesses over the next quarter does not look set to improve. It is already feared that the current cold spell will seriously affect businesses throughout the UK and on top of this, Government cuts, high inflation rates and tough lending conditions will only add to the number of businesses insolvencies in the coming months.
“MarketInvoice presents one possible solution to these issues, by offering businesses a flexible and competitive way to raise short-term finance with no hidden fees, onerous collateral, or lengthy contracts. SMEs can obtain up to 90% of their corporate invoices upfront from global institutional investors who compete between them to provide SMEs with the lowest cost of finance through an auction based bidding process.
“We have helped over 60 small businesses in the last year and channeled over £5 million of funding to SMEs since we launched Q1 2011. And we want to do much more to help UK business grow out of this recession."
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