Despite the UK falling back into recession earlier in the year, there has been a somewhat surprising fall in corporate insolvencies in Q2 of 2012 compared with the same period last year.
According to figures published by the Insolvency Service 4,115 companies entered compulsory liquidation or creditors’ voluntary liquation between April and June, representing an unexpected fall of 3.6% on the previous quarter and 2.4% compared with Q2 in 2011.
In addition to the above liquidations, there were a further 1,310 corporate insolvencies in Q2 2012 consisting of 333 administrative receiverships, 625 administrations and 352 company voluntary arrangements. This represents a 6.3% rise compared with the same period last year.
The report published by The Insolvency Service does not comment upon the reasons for businesses becoming insolvent, however a survey of 500 SMEs conducted by credit rating agency Graydon UK reported a staggering 16% of businesses surveyed had closed down due to late payment. 23% of business surveyed highlighted the issue of late payments as a serious problem and a continual risk to cash flow.
The results of the survey go some way to highlighting the importance of implementing effective credit management systems, particularly during a period when the cash flows of many companies continue to be fragile.
Holmes & Hills' team of specialist debt recovery solicitors offer debt recovery services to businesses across Essex and Suffolk.
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