It is never easy to run a company successfully, but this endeavour is particularly tough now because of the economic conditions affecting the UK and many other countries around the world. One of the issues managers have to face concerns the failure of third parties to settle their debts. Thankfully, it is possible for firms to make the most of credit management solutions and trade credit insurance to help mitigate such risks.
Figures released recently by Experian showed that there was a rise in business insolvencies in the UK last autumn. The organisation revealed that 0.1 per cent of companies became insolvent in October. This was up from 0.9 per cent in September and 0.8 per cent in October 2010.
The rate of insolvencies varied between regions and the area to be least affected by such failures was the south-west of England, where the rate was 0.06 per cent. At the other end of the scale, the north-east of the country performed worst, with an insolvency rate of 0.13 per cent.
Meanwhile, in terms of industries, the oil sector continued to have the highest financial strength score registering 83.89 and food retailers came out at the bottom with a strength score of 73.5. This figure refers to the likelihood that a business will fail in the next 12 months, with 100 being the least likely to default and one being the most likely.
Commenting on the findings, which may be of interest to those seeking trade credit insurance and other credit management solutions, UK and Ireland managing director for business information services at Experian Max Firth noted that they are a concern.
He stated: “While 0.1 per cent represents a very small percentage of the UK’s business population failing in October, we are seeing an increase in insolvencies across most sizes of business.
“As a result of this, more and more businesses are now acutely aware of the importance of having a good understanding about the companies they deal with. Using commercial information to gain insight into a customer, partner or supplier’s financial health is a highly effective way to helping businesses make even smarter decisions in today’s environment.”
Source: http://press.experian.com/United-Kingdom/Press-Release/uk%20business%20insolvencies%20increase%20in%20october%202011.aspx