It’s been a strange few months for UK businesses, with a change of government and growing speculation over what kind of news the upcoming Autumn Budget will bring. Such levels of uncertainty can make it hard to know where you stand as a business and it’s important to look towards the facts and figures when assessing performance and making important decisions.
One valuable tool businesses can use to understand their own successes and challenges is data provided by the Insolvency Service. Each month, the Insolvency Service publishes a comprehensive set of business insolvency statistics, covering the rate of liquidations and administrations in the UK. The latest report is particularly valuable for businesses feeling uncertain about the months ahead, here’s why.
Key Takeaways From The Business Insolvency Statistics
Each month, the business insolvency statistics provide data related to the number of compulsory liquidations, creditors voluntary liquidations (CVLs), company administrations and company voluntary arrangements (CVAs). The latest figures cover July 2024 and compare this data to the previous month along with the same month in the previous year, allowing businesses to make easy comparisons and understand both seasonal and longer-term trends.
This month’s Insolvency Service statistics contain three key headlines, all set amidst the overall trend that overall company insolvency levels are higher than they were in July 2023:
1. Overall Company Insolvency Levels Higher Than Last Year
In July 2024, 2,191 company insolvencies were registered in England and Wales. This number includes all types of company insolvency and is 16% higher than the same month last year.
2. Compulsory Liquidations At Their Highest Since Before The COVID-19 Pandemic
High levels of compulsory liquidation play a significant role when it comes to the overall rise in company insolvency levels. Of the 2,191 company insolvencies reported in the latest business insolvency statistics, 320 of them were compulsory liquidations. Not only is this more than last month and last year, but also the highest number since before the COVID-19 pandemic.
3. Company Administration Numbers Are Rising
Company administration numbers are also on the up, with 155 companies entering into administration in July 2024.
What This Means For Your Business
At first glance, these headlines make for concerning reading. Increased levels of business insolvency on every front indicate that growing numbers of businesses are struggling to meet their financial obligations.
Particularly concerning is the rise in compulsory liquidations, as this indicates that high numbers of businesses are failing to take appropriate steps to manage their debts and are being forced to close down via a winding-up petition. Businesses that find themselves in a precarious position with creditors should always be aware that they have options and do not have to wait for liquidation to be enforced by the courts. Creditors Voluntary Liquidation is also an option and allows businesses to liquidate voluntarily, typically providing better outcomes to creditors.
Businesses can also take advantage of a range of rescue options available, which may allow liquidation to be avoided entirely. This month’s business insolvency statistics do indicate that these options are being explored and are successful in the current economic climate, as company administration numbers are high.
If your business is struggling, we would therefore recommend that you seek expert advice as soon as possible. Swift action when faced with challenges ensures that you have a wide range of options available to you, which may include business rescue methods such as company administration.
At Ballard Business Recovery, we can provide you with clear and transparent advice when it comes to the best road to recovery for your business. Speak to us today about your concerns and our business rescue experts will work with you to come up with the best route forwards.
