Many businesses have been faced with seeking insolvency advice as the tough economic climate forces many companies out of business or at the very least into financial crisis.
Official statistics from the Insolvency Service revealed that during 2011, there was an increase of between 2% and 4% of businesses going into liquidation, when compared to the year before. The figures for UK businesses were in contrast to that of individuals.
Data showed that during 2011, there was a significant drop in individual insolvencies, which varied between 1.7% and 15.5% throughout the year. It seems that the economic downturn and uncertainty of recent years has taken its toll more heavily on companies, as the public strive to get on top of their personal finances. It shows that many individuals have simply had to make some tough decisions when managing their money during a period of time when inflation has soared over earnings increases and taxation is at an all time high. In situations like this you often expect cases of insolvency among the general public to go through the roof. There has been a lot of private and government debt and insolvency advice available to the general public during the tough times and this has obviously been of some help.
One of the cofounding economic issues of individuals getting on top of their finances and curbing spending, is that for businesses who rely heavily on consumer trade are affected further still. Business slows down and the chances of them recovering is quite slim, unless their business model can be tweaked, the economy recovers (which often takes time) or the business has other revenue or equity to see it through the blip.
Statistics reveal that there are certain business types that are more venerable and at risk from insolvency. Smaller businesses, in particular those outside of the generally speaking more affluent South-East, are at greater risk of failure and therefore more likely to require corporate recovery. For any company worried about the risk of insolvency or even if you would like advice on how you can avoid hitting financial trouble during times of economic hardship, speak to the insolvency advice experts.