Ahead of next week’s release of the official GDP statistics for the second quarter of 2011, a leading business information provider has reported that company insolvencies increased during the three months to July on an annual and quarterly basis.
According to the Equifax Quarter 2 Business Failures Report, insolvencies rose 3.4% annually and 2.2% quarterly – the first increases in more than 12 months – to emphasise the problems that UK SMEs continue to face.
"This new report is disappointing given that the trend for more than a year has been a reduction in companies failing," said Neil Munroe, external affairs director at Equifax.
"But I think it does reflect the fact that some businesses have just found it impossible to continue to keep their heads above water as the economy fails to pick up to any great extent."
Challenges such as late payment remain prohibitive to firms that are finding trading on credit terms more hazardous than ever before, and this is having a major impact on the financial health of these businesses.
Whilst the transport and communications sector saw the highest year-on-year rise in corporate insolvencies of any, the North-East of England suffered the highest regional increase of 21.8%.
Mr Munroe continued: “With several other reports out this week reflecting that the UK economy continues to remain fragile, it's not surprising that some businesses have just found it too difficult to survive.
"That’s why those businesses that have survived so far need to continue operating best practice and harnessing the power of the latest risk management solutions to minimise the threat of bad debt and secure the future of their business.
"The importance of monitoring existing customer performance cannot be over-stated to ensure businesses weather the unpredictable conditions that exist at the moment."