UK insolvencies increase by 31 per cent in Q2

Wednesday, 1st September 2021 13:18

A recent report by The Insolvency Service, details that business insolvency figures have risen 31 per cent from Q1 2021, and by 4 per cent when compared with the same quarter in the previous year.

The increase in corporate insolvencies, to the highest quarterly total in 18 months, were comprised largely of Creditors’ Voluntary Liquidations (CVLs) (90%) which have increased to pre-pandemic levels. The pandemic has been a challenge for UK businesses, with many having to cease trading using the CVL process before their situation becomes any worse.

There is also added pressure on businesses to repay debts they have accumulated from government loan schemes during the pandemic, with first payments for the bounce back scheme and Coronavirus Business Interruption Loan Scheme (CBILS), now becoming due. However, for some, immediate repayment is just simply not viable. 

And while business owners were hopeful that the end of lockdown and the lifting of restrictions would give them a boost when reopening, consumers have still not returned to their normal shopping habits, so while situations may have improved, the economy is still a long way from recovering from the blow of the start of the pandemic and the effect it has had on the cash flow for so many businesses. 

A report by insolvency specialist Begbies Traynor, has also released figures showing that there are now currently 650,000 UK companies in serious financial distress, clearly indicating that despite the ending of restrictions, businesses have struggled with regular changes to the roadmap out of lockdown. It also noted increased creditor activity against companies in debt, with 14,460 county court judgements in the second quarter of the year – nearly double the figure for the same period in 2020.

With the removal of the final Covid restrictions and the vaccine rollout continuing, there’s a chance many businesses may be able to return to near-normality again – although some sectors will take longer to get to this point.

At identeco, our Business Support Toolkit includes a range of services that subscribers can use to keep up to date on the stability of businesses (credit referencing) in order to avoid customers moving to insolvency with bad debt. The company reports from our Business Support Toolkit include a credit health rating, credit limit and creditor days to assist your credit decisioning process. When using this information in conjunction with our Account Monitoring and automated alert service, we can put you in the driving seat: making sure you understand your customers financial stability with up to the minute information on changes to your customers.

For more information about the identeco-RFA credit scoring system, click here or contact us today.

 

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