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Rate of construction insolvency falls slightly

22 Oct 12 Latest business insolvency figures from Experian show a small improvement in the insolvency rate in UK building and construction.

The rate fell from 0.17% in September 2011 to 0.14 per cent in September 2012 – better than any other sector.

Across all sectors there was a 3.1% drop in the number of business insolvencies in September 2012, compared to 2011 – 1679 businesses in total. However, the figures show a slight increase in insolvencies among larger firms this month, which could lead to a knock-on effect among smaller firms in the future.

Overall, smaller firms saw the greatest improvement in insolvency rate, especially those between 26-50 employees. For bigger firms, the only increase in insolvency rates came among firms with 51-500 employees. West Midlands (lowest rate since 2007 – down 34%) and Yorkshire (up 23%) are the regions that have seen the largest decrease and increase respectively.

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.”

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