19% drop in corporate insolvencies in Q2 2010

News Article - 21 May 2012
Category: Business

According to recent Insolvency Service figures, corporate insolvencies fell 19.1% in Q2 2010 compared with the same period last year. 4,080 company liquidations were recorded, down from 5,041 in Q2 2009. This is a 0.5% increase on Q1 2010.

Compulsory liquidations also fell 9.9% to 1,169, compared to the second quarter of 2009. Creditor voluntary liquidations fell to 2,911, equal to a year-on-year decline of 18.3%. Receiverships and administrations also experienced year-on-year drops.

Company voluntary arrangements (CVA) have increased, with 232 CVAs in Q1 2010 compared with 204 in the previous quarter and 157 in Q1 2009.

In the three months to August, there were a total of 1,311 receiverships, administrations and company voluntary arrangements. This equates to a 14.3% year-on-year decline. Broken down, there were 777 administrations, 302 receiverships and 232 CVAs, equalling a total year-on-year decrease of 14.3%

Whilst the picture looks positive, companies should be wary of complacency. As banks gain more confidence and become less willing to lend to 'less viable' companies, smaller businesses may struggle to receive the finance needed to cope with short-term emergencies. Industry experts expect the number of corporate insolvencies to be far higher in the fourth quarter and continue rising into 2011.

A number of exacerbating factors may also make it harder for companies to survive in the marketplace. In particular, the 2.5% VAT rise and the Government's commitment to reduce spending could see an increase in corporate insolvency as businesses struggle to adapt to rapidly changing market conditions.

Ian Little, Financial Director at Access, believes insolvency can often be caused by cashflow issues.

"During recessionary periods many company insolvencies are caused by poor cashflow," says Ian. "Companies without sufficient short-term liquidity often can't meet daily financial obligations, leading to insolvency. Indeed, some very profitable companies have become insolvent due to cash deficiency. Every aspect of a company's finances requires attention and knowledge."

Access software solutions helps companies keep track of cashflow, supplying key information that can help facilitate positive business decisions. Cashflow forecasting, for example, provides robust modelling technology that integrates historical data with current business drivers, delivering a detailed understand of the company's future financial landscape.

For more information, please call Access on 0845 345 3300.

Article keywords: insolvency figures, cashflow forecasting, business solutions, business consulting, enterprise software, Access Group

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