Business insolvency rates in January 2013 hit their lowest level in over five years, according to the latest monthly update from Experian.
Just 0.06% of all businesses in the UK failed over the course of the month – the lowest proportional insolvency rate since June 2007.
The rate is down from 0.08% at the end of 2012, and from 0.7% in January of that year; medium-sized companies saw the greatest improvement, as the insolvency rate of those with 26-50 employees fell from 0.20% to 0.14% year-on-year, and for 51-100 employees from 0.14% to 0.07%.
However, it was not a unilaterally better month for businesses of all sizes, as those with 101-500 employees saw a modest increase in insolvency, from 0.10% to 0.11% year-on-year.
The lowest rate of all was among sole traders and micro-businesses, who seem better able to adapt to changing economic conditions than their larger counterparts.
Among these companies with just 1-2 employees, only 0.04% failed in January 2013, down slightly from 0.05% the previous year.
“High-profile insolvencies so far this year show that it is still a challenging climate,” says Experian Business Information Services UK&I managing director Max Firth, “and businesses across all sectors and sizes need to adapt to changes in their trading environment.”
In a climate of high-profile business insolvencies, it is always wise to focus on the creditworthiness of clients, in order to avoid unnecessary exposure to credit risk.
But Mr Firth adds that companies positioning themselves for growth and a healthy order book in the year ahead should also look to their own credit rating, to ensure they are presenting themselves in the best possible light to potential suppliers and sources of finance.