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How do firms get into insolvency issues?

Date Added: 23/10/2013  

Despite the improvements witnessed in the UK's economic situation this year, a lot of companies are still finding it hard to survive on a month-to-month basis.

Insolvency is a reality for businesses in all types of sectors across the country at the present time, with organisations constantly having to find new ways to cut costs to stay afloat.

The latest figures from the regular Business Insolvency Index from Experian show year-on-year business insolvency rates have dropped for the fifth consecutive month.

Data released by the global information services company revealed the rate fell from 0.08 per cent in September 2012 - when 1,679 went out of business - to 0.07 per cent in September 2013, when 1,609 firms failed.

Despite the slight drop in the number of companies that are going into insolvency, this is an issue that is still very much a problem for a lot of business owners in the UK.

For many, it only takes a couple of late payments to cause serious financial issues across the company and the lack of business lending available on the high street has exacerbated issues.

Getting access to finance to secure the future of a firm is a massive challenge at the moment and business owners are having to look into new and innovative funding methods to keep going.

Although the UK economy is growing and is forecast to expand growth even quicker in the next couple of years, insolvency is a problem that is evidently not going to go away any time soon.

Max Firth, managing director of Experian Business Information Services in the UK and Ireland, said the fall in insolvencies is "welcome" news and pointed to the construction and financial sectors as ones that are performing particularly well.

"By having a good handle on the financial position of both suppliers and customers, firms can keep on top of risks, as well as investing in growth areas where possible," he said.

Taking company debt advice as soon as the business is starting to get into financial problems is also key, as the earlier these issues can be addressed, the more chance there is of securing a bright future for the firm.

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