The gender divide in personal and corporate insolvency
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Does gender have a place in credit control? You might want to say no – and certainly discriminating against any kind of customer due to their gender or any other personal characteristic is probably not a good starting point for your credit policies.

But figures from the Insolvency Service show that there is indeed a significant influence of gender on different types of insolvency – and in particular, women are now the majority share in personal insolvencies, but not in corporate insolvencies.

For the first time, more personal insolvencies are entered into by women than by men, although the reasons why this is the case are still unclear.

In contrast though, 83% of male insolvencies are as a result of company failure, compared with just 32% of female insolvencies; while this still relates to personal insolvencies rather than the collapse of the relevant company itself, it’s a clear consequence of financial difficulties due to company failure.

R3, the association of business recovery professionals, says there may be several reasons why women are now the lion’s share of personal insolvency.

President Phillip Sykes said: “It may be that women are less likely to stick their head in the sand about debt problems; or it could be that low-value or consumer debts have a bigger impact on women’s finances than men.

“Either way it is also a reflection, particularly in the under-35 age group, of women’s rapidly increasing economic activity, which is closing the historic gap with their male counterparts.”

For credit control policies, basing decisions on gender alone is probably unwise; however, it is perhaps a useful indicator of when an individual might be more likely to be in financial difficulty, whether that relates to a female credit applicant with substantial consumer debts, or a male applicant for business credit whose own company is on the rocks.

Significantly, financial difficulties may be becoming harder to spot, making effective credit control even more important, as people are increasingly likely to slide into difficulty gradually, rather than experience a single catastrophic economic event.

Mr Sykes observed: “Bankruptcies, which are more likely to involve men and are often linked to ‘big bang’ personal finance issues like job loss or company failure, have fallen dramatically in the last five years, whereas the number of other types of insolvency has remained quite steady.”

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