Evidence released from The Insolvency Service has shown that both corporate and personal insolvencies have fallen in Q3 of 2013, although analysts suggest not everything may be rosy.
In regards to personal insolvencies, the report showed that in the first nine months of 2013 the rate fell by 9%. Approximately 75,000 personal insolvencies were filed between January and September. This has been accredited to better money management, with less individuals opting for bankruptcy and more for individual voluntary arrangements (IVAs). The spike in IVAs could be a result of pay not keeping in line with inflation rates and if this trend continues more personal insolvencies could be on the horizon.
Although not as sharp a decrease, the levels of corporate insolvencies also dipped in Q3. With a drop of 2.6%, the total number of corporate insolvencies was reduced to 964. Even though a decrease has been seen, many analysts are describing it as more of stagnation, with the potential recovery of the economy not being as quick as we are led to believe.
The total percentage of corporate insolvencies may be down in Q3, but have still risen from 2012, and with the Christmas period approaching, we may still see an increase from last year. It would be no surprise to see both large and small retailers filing for insolvency measures during the Christmas period, as shoppers continue to migrate online for the best deals.
A word of warning for any director, previous patterns and experience has shown that more businesses are likely to become insolvent as the recession comes to a close. Economic growth is often the last straw for struggling businesses as bad debts, increased workloads, the need for more credit, which is often unavailable, and an increased interest rate forces them into insolvency procedures.
It is always best to seek advice if your company is struggling financially, a precarious footing now may see a future landslide when the economy recovers. If directors act as soon as possible in insolvency matters they may have more options available to them. If you or your business needs financial advice, contact us.