R3 Finds UK Company Insolvency at Record Low

Recent research carried out on behalf of the insolvency trade body R3, has found that company insolvency levels in the UK have reached a record low. The survey, which took the form of telephone-based interviews with 500 senior financial decision makers in businesses across the UK, found that only 24 percent of firms are suffering from distress. All company insolvency procedures were down including company liquidation, company voluntary arrangements and compulsory liquidations.

The interviews, conducted in April this year (2015), revealed that this year’s figures represented an incredible 40 percent drop when compared to March 2012, and an 11 percent decline since November 2014.

In fact, all the distress levels monitored were at their lowest levels since R3 began its research in 2012. The following indicators of business distress were measured:

  • Decreasing profits
  • Decreased sales volumes
  • Regularly using the maximum level of overdraft
  • A fall in market share
  • The need to make redundancies

The percentage of firms suffering from decreased profits has halved since the last survey in November 2014 and has now fallen to just 10 percent. Only 3 percent of the firms surveyed had made any redundancies in this time. 11 percent reported decreased sales volumes; 8 percent had regularly pushed their overdraft facility to its limit, and 6 percent had experienced a fall in market share.

Indicators of growth

As well as indicators of business distress, the survey also uncovered areas of growth in UK businesses. Again, these figures showed that many companies are currently in good health, with 68 percent of businesses reporting at least one area of growth. The growth indicators include:

  • Investing in new equipment
  • Increased sales volumes
  • Business expanding
  • Increase profits
  • Growth in market share

27 percent and 38 percent of businesses had invested in equipment and experienced an increase in sales volumes respectively. 20 percent of businesses were expanding; 31 percent had an increase in profits, and 22 percent had a growing market share.

Business growth plateaus

Commenting on the research, Phillip Sykes, the President of R3, said: “Having stayed constant throughout 2014, UK business distress levels have fallen once more. Many companies will feel they have successfully negotiated the trickier parts of the rapid economic growth we saw last year. As growth slows, businesses are less at risk of over-expanding themselves.

“The flip side is that signs of growth may start to become rarer as business growth hits a plateau. For example, while the share of businesses (68 percent) experiencing at least one sign of growth returned to record highs, the share of businesses reporting individual signs of growth is dropping.”

There’s good news for smaller businesses too

Smaller businesses are also experiencing improving economic health. This time around only 20 percent of sole traders reported one or more signs of distress, falling from 50 percent in November 2014.

While it is the very largest businesses that continue to report the fewest signs of distress, it is extremely encouraging to see the problems for smaller business easing. And, business confidence is staying strong for the coming year, with only 4 percent expecting to see their activity decrease in the coming year, with 47 percent anticipating a rise.

If you are not one of the lucky ones are your company is insolvent and you need help fast with creditor pressure then call 08000 746 757.

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