According to the latest statistics from The Insolvency Service, underlying company insolvencies last year were at their highest annual level since 2013. Additionally, the amount paid out to former employees from the National Insurance Fund due to redundancies increased to the highest amount in seven years.
The year on year figures for 2019 highlight that the number of underlying company insolvencies increased by 6.8% compared to 2018. There was a total of 17,196 underlying company insolvencies, with 12,060 underlying company voluntary liquidations and 1,814 administrations.
However, for quarter four of 2019 the actual number of underlying company insolvencies fell compared with the previous quarter. The last quarter of the year saw a drop in numbers across all types of company insolvency, with compulsory liquidations falling for the fourth successive quarter.
Construction sector insolvencies continue to increase
The sector which saw the highest number of insolvencies in the 12 months ending Q4 2019 was again the construction industry. This continues to be hit hard, with 3,198 insolvencies in the last 12 months. The figure was slightly down from the previous quarter’s year on year figures.
Other areas that have a high number of company insolvencies are the wholesale and retail trade, repair of vehicles sector; accommodation and food service; and administrative and support service.
The sector that saw the largest decrease was the information and communication services, with a 7.5% fall compared with the 12 months ending Q3 2019.
High street insolvencies push up costs
The number of company insolvencies during 2019 has pushed up the amount of money paid out through the National Insurance Fund to former employees for redundancies. The rise of 3.9% in the number of underlying company insolvencies across the retail sector has a large part to play in this increase.
The Insolvency Service paid £346.11 million last year to members of staff due to their employer going into some form of corporate insolvency. This figure has increased by 16% compared to 2018 – equating to a rise of £48.04 million.
This was the highest amount for seven years and was made up of £222.54 million in redundancy pay, £63.93m for money that employees would have earned in their notice period, £18.29 million for unpaid holiday pay and £41.35 million to cover outstanding wage, overtime and commission payments.
Managing the late payment of invoices
One of the biggest concerns for small businesses is the potential for their customers to go into administration whilst owing them large sums of money. It’s important that companies have an effective credit control policy in place, which limits the amount of debt customers are allowed to accumulate and successfully manages their debt recovery.
At CEA Limited we work with our clients to collect late invoice payments from their customers. This improves their cashflow and minimises the financial risks if they were to go out of business.
To discuss your business debt collection requirements, you can contact our team today on 0113 532 8350 or by email at office@cealimited.co.uk.
Find out more:
Q2 insolvency figures show company insolvencies at five year high
5 tips if a customer is going into administration
Late payments nearly doubled in 2019, causing difficulties for more businesses