Insolvencies slow down but businesses are not out of the woods

Company insolvencies across England and Wales fell in July and are six per cent lower than the same month last year, official figures show.

The headline reduction in insolvencies to 1,727 is down 20 per cent compared to June’s registered total of 2,163.

The level of Creditors’ Voluntary Liquidations (CVLs), mainly seen among smaller companies, is also starting to drop. The total for July was 1,336 – 17 per cent lower than in the same month last year.

By contrast, the total number of administrations and Company Voluntary Arrangements (CVAs) – rescue procedures which tend to be used by larger companies – was four times higher than in July 2022.

Conditions remain challenging, and the latest figures shared by the Insolvency Service are still well above the pre-COVID-19 historic average. Compared to July 2021, corporate insolvencies have increased by more than 57 per cent and almost 20 per cent compared to July 2019.

Economic issues continue to bite

Despite some positive trajectories, experts are warning businesses to acknowledge and address persisting challenges.

Nicky Fisher, the President of R3, the UK’s insolvency and restricting trade body, said: “Costs are rising at a time when people are cutting spending back, leaving businesses facing the challenge of squeezed margins and shrinking revenues and having to work out whether to absorb their cost increases or pass them on to their customers.

“Alongside these, requests for wage increases, and higher energy bills are also hitting businesses hard as the costs of cooling premises in the summer are just as challenging as keeping them warm in the winter.

“These are making firms more cautious about investment or recruitment – especially as the increased cost of borrowing will make raising funds for investment more challenging.”

Seek advice

Businesses are being advised to continue vigilance, seek guidance and consider long-term financial management strategies that prioritise financial stability.

Need advice on this issue? We can help.

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