UK Construction Industry’s insolvency rates fall

The rates of insolvency fell for the UK construction industry from 0.17% to 0.14% during September 2011 to September 2012 according to the latest business insolvency figures from Experian.

Across all sectors there was a 3.1% drop in the number of businesses entering into insolvency in September 2012 compared to 2011, which is a total of 1679 businesses. There is however a worry that due to a slight increase in insolvencies for larger firms there could be an impact on smaller firms in the future.

Generally, the smaller firm with between 26-500 employees saw the best improvement with the least insolvency. Insolvency rates increased though for the larger firms with 51-500 employees.

Regionally Yorkshire suffered the worse with insolvency rates up 23% where as the West Midlands appear to be on the recovery track with insolvencies down 34% which is the lowest rate since 2007.

Experian Business Information Services, UK&I, managing director Max Firth said: “Overall insolvency figures are down and the picture remains stable, which is encouraging. In addition, we’ve seen real pockets of improvement, such as in the West Midlands and South West, which have both seen a drop of over 30%.  Also encouraging are the lower rates of insolvencies among some of the small firms.   However in contrast, larger firms experienced a slight increase in insolvencies, which may lead to smaller firms that were supplying to them, experiencing a knock on effect.

This highlights the need for firms need to be prudent and consider their credit management practices in order to survive.  Risk planning and monitoring their financial health and that of their customers and suppliers can make or break a business.”

Recipro sourced this article from Construction News.

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