1,266 businesses failed in January 2011, representing 0.07 per cent of the UKâs business community. This compares with 1,426 in January 2010. The strength of the UKâs business community also improved year-on-year, with its overall financial strength score improving from 81.16 in January 2010 to 81.49 this year.
Max Firth, Managing Director of Experian pH, said: âOur analysis shows that business failure rates are falling steadily and the financial strength of the UKâs business community is improving. Our data also shows that the post-recession business population is beginning to increase once again, with the net number of firms trading up by one percent when compared with last January. Irrespective of the environment, firms need to be vigilant and ensure that they have good insight into the financial risks associated with insolvencies among clients and suppliers. With issues from fulfilling increased orders through to late payment, the knowledge of how these will affect cash flow is imperative.â
Other key highlights include:
â¢ Businesses in the South West continued to be the most robust, with the best financial strength score of 83.10 during January 2011.
â¢ Yorkshire saw the biggest drop in the rate of insolvencies, from 0.14 per cent in 2010 to 0.06 per cent in January this year.
â¢ Wales and the North West were the only two regions to see an increase in the rate of business insolvencies year-on-year. The North West had the highest insolvency rate in January with 0.11 per cent of its business population failing, closely followed by the North East at 0.10 per cent.
â¢ In January 2011, medium sized businesses (26-50 employees) had the highest rate of insolvencies (0.17 per cent)
â¢ Businesses with 51 to 100 employees had the worst average financial strength score (81.48), although they did see a small year-on-year improvement (from 80.06).
â¢ Food retailers suffered the biggest decline in financial strength, dropping from 76.85 in January 2010 to 75.77 leaving it the industry with the lowest score in January 2011.
â¢ The oil industry remains the top performing sector in terms of financial strength leading the way with 85.98.