The Insolvency Service has released the latest insolvency figures covering the second quarter of the year. The data shows that company insolvencies have increased by 2.6% since the first quarter of 2019. They are now at their highest level since the first three months of 2014.
Second quarter company insolvencies
There was a total of 4,321 underlying company insolvencies in the second quarter of 2019. This is a rise of 11.9% compared to the same quarter of 2018 and a 2.6% increase from the previous quarter.
The rise is mainly as a result of the increase in the number of creditors voluntary liquidations (CVLs), which rose by 6.9% compared to the first quarter of the year. Overall CVLs accounted for just over 70% of all company insolvencies.
In the last quarter, all other types of company insolvency have fallen. This includes a 4.1% drop in the number of compulsory liquidations and a 1.1% decrease in company voluntary administrations (CVAs).
Administrations were at a five year high in Q1 of 2019, but in Q2 the number fell by 11.4%. However, this figure remains just over 15% higher than in the same quarter last year.
Construction sector still not out of the woods
The main sector driving the increase in insolvencies is the accommodation and food service industry. This saw a 3.4% rise for the 12 months ending Q2 2019 compared to the 12 months ending Q1.
Over the same period, there was a 1.2% increase in insolvencies within the construction industry. In the 12 months ending Q1 2019, the construction sector still has the highest number of new company insolvencies (3,100).
Areas that are going against the trend include administrative and support services, with a 2.8% decrease, and transportation and support services, which saw a 3.9% drop in insolvencies.
Financial pressure on small businesses
These latest figures highlight the increased pressure on businesses of all sizes, but particularly SMEs. Cash flow problems can cause significant issues for companies. In the worse case scenarios, businesses have gone into administration because their customers haven’t paid on time.
Reducing the number of bad debtors and the time it takes customers to pay invoices can have a positive effect on your cash flow. It’s important to chase up unpaid invoices and start business debt recovery processes as soon as possible.
At CEA Limited we work with all our clients to achieve a positive outcome for their business. We recover commercial debts every day and help our customers to get the money they’re owed quicker.
If you have unpaid invoices to recover then contact our commercial debt collection team today to discuss your requirements.