Money (9)

More than 100,000 businesses were owed money by companies and individuals that became insolvent during 2015, according to insolvency trade body R3.

In total, around 113,000 businesses, the equivalent to 6% of all businesses in the UK were creditors in an insolvency procedure.

Medium-sized businesses – those employing 51-250 people – were most likely to have been exposed to another firm or individual’s insolvency, with one-in-seven (14%) of these businesses owed money by an insolvent individual or company.

Phillip Sykes, R3 president, said: “Growing businesses encounter two classic problems: going for growth by taking on new customers without properly checking their creditworthiness; and a lack of controls to monitor their exposure.

“This leaves growing businesses, particularly medium-sized ones, as the most at risk of being exposed to others’ insolvencies.

“Although the UK insolvency regime is ranked as one of the best in the world, it is often the case that those owed money in insolvencies won’t see all of their money back. This can have a serious impact on their own finances.

“Businesses need to take preventative measures and properly asses risks before trading with individuals or other firms. Doing so will minimise the chance of being exposed to others’ insolvencies in the first place."

The research also found that only 4% of large businesses (250+ employees) have been a creditor in the last year. By comparison, between 5-7% of businesses employing between 1 and 50 people were a creditor in an insolvency process last year.

The research also showed that 4% of businesses employing between 2 and 5 people were a creditor in over five insolvencies last year (23,000 businesses) – the highest proportion of any business size in this situation. On average, all businesses should be a creditor in one insolvency procedure every five years.