August 2013 – Insolvencies Down Year on Year

News for accountantsDespite the financial doom and gloom we keep hearing about in the press there are signs that the economy is stabilising, if not quite booming just yet.  Small companies that employ up to 2 people account for some 1.5 million businesses in the UK, and the year on year insolvency rate has fallen for the third year running.  In July 2012 the rate was 0.07%, in 2013 it fell to 0.06% (This compares favourably with the overall insolvency rate of 0.09% in July 2012 and 0.08% in July 2013).

The message is quite clear – more businesses are surviving, and the trend seems set to continue which is good news for the economy and employment as a whole. But the signs of recovery are still regarded cautiously by business planners and accountants alike.

Even in areas where the economy does seem to be reviving, such as Brighton and Hove, the advice is to make sure that companies not only monitor their own accounts closely, but also keep a close eye on suppliers and customers alike.  If payments from certain customers are getting later and less regular it may be a sign that they are in trouble and credit should be limited to protect from major potential losses.  If suppliers start asking for payments in advance it may that they’re trying to plug their own financial holes with someone else’s money.

That said, all positive signs are encouraging and any good news is welcome after the tough years small companies have had to battle through, and business leaders and accountants alike see the first green shoots of recovery in such reports.