Experian, the information services company, published its insolvency data for 2008. Its analysis shows that there were 23,879 business failures over the 12 months to the end of December 2008, representing a 30% increase on 2007. In terms of cities, London and Birmingham were the UK’s insolvency hotspots in the final quarter of the year with 1,221 and 381 businesses respectively failing in the two cities.
The latest Insolvency Report and Distress Index from Experian’s Business Information division highlights that from October to the end of December 2008, 7,238 businesses failed. This represents a 52% increase compared to Q4 2007, which saw 4,751 failures.
“Relying on sparse financial information and out of date accounts to make business-critical decisions could have devastating consequences for organizations,” says Tony Pullen, managing director of Experian’s business information division. “More than 65 firms failed every day in 2008 and this underlines why it is vital that organisations use real-time data insight to determine whether or not to do business with a company.
“We recommend that companies use this valuable information to their advantage as an early warning system to alert them to customers or suppliers heading into difficulties. Warning signs can include a major reduction in share capital, late filing of accounts through to adverse notices, such as County Court Judgements. We also advise clients to use payment performance data to identify companies’ payment patterns and worsening payment trends, which are strong indicators of reduced cashflow, which can then lead to possible insolvency. This level of insight will not only indicate whether a customer is likely to pay, but also when – a powerful tool in today’s climate.”
D.C.