COMPANY FAILURES FALL DURING 2003
January 8 2004. The number of limited companies failing in 2003 fell by 9.4 per cent compared with 2002, according to the latest figures released by Experian®, the global business solutions company. In 2003, there were a total of 17,522 corporate failures - 1,825 fewer than the 19,347 recorded in 2002.

In the fourth quarter 2003, October to December, 4,159 limited companies failed compared with 5,045 in the fourth quarter of 2002, resulting in a fall of 17.6 per cent.

The downward trend in corporate failures has accelerated throughout 2003, in marked contrast to 2002, when an increase of 9.8 per cent was recorded. In quarter one, 2003, there was a decline of three per cent on the same period in 2002, a six per cent decline in quarter two, 12 per cent decline in quarter three and a 17.6 per cent decline during quarter four.

Phil Cotter, Managing Director of Experian's Business Information division, commented: "The introduction of new insolvency rules during 2003 to help make it easier for UK businesses to get out of financial trouble has been reflected in the overall decline in the number of UK businesses going to the wall in 2003, while the number of companies going into administration increased by a record 74.5 per cent in the final quarter of the year. Under the new rules, banks are no longer able to appoint a receiver; they can only appoint an administrator and it is now easier for companies to put themselves into administration to gain breathing space from their creditors and put measures in place to help prevent corporate failure.

"The fall in corporate failures is very welcome, but, as the figures highlight, a large number of companies are still failing each year and organisations should ensure that they have good credit management practices in place to protect themselves against the risk of non-payment."

In the period October to December 2003, the number of voluntary liquidations, compulsory liquidations and receiverships declined by 11.1 per cent, 36.1per cent and 24.3 per cent respectively over the same period in 2002. However, administration orders and voluntary arrangements increased by 74.5 per cent and 15.9 per cent respectively. Overall, voluntary liquidations, compulsory liquidations and receiverships declined by 6.7 per cent, 16.7 per cent and 17.3 per cent in 2003 compared to 2002; administration orders rose by 20 per cent and voluntary arrangements by 10.4 per cent.

Only eight out of the 34 industries surveyed by Experian recorded an increase in business failures in the fourth quarter of 2003. In the year as a whole, eight industries suffered an increase in the number of corporate failures, one remained the same and the remaining 25 industries recorded a decline in the number of failures.

The main increases were seen in Plastics and Rubber (up 8.2 per cent), Electricals (up 3.8 per cent), Food Manufacturing (up 8.1 per cent) and Utilities (up 28 per cent).

The most significant improvements among the 25 industry sectors where failures fell in 2003 were Extraction Industries (down from 17 to 10), Building Materials (down from 13 to nine), Information Technology (down from 1109 to 781), Printing, Paper and Packaging (down from 56 to 37), Wholesaling (down from 901 to 762), Post and Telecommunications (down from 243 to 170), Insurance (down from 57 to 46) and Health and Household (down from 18 to 12).

The Business Services sector recorded the highest number of failures in 2003, at 3,170, a decline of 423 from 3,593 in 2002, or 12 per cent.

Regionally, only the West Midlands, Scotland and Northern Ireland recorded more business failures during the fourth quarter of 2003 compared with the fourth quarter of 2002.

In 2003 as a whole, only the North East (up 4.9 per cent) and Northern Ireland (up 41.9 per cent) recorded increases in corporate failures compared 2002. In all other regions, there was a decline in corporate failures - the City of London (down by 21.8 per cent), London (down by 4.8 per cent), South East (down by 10.8 per cent), South West (down by 13.2 per cent), Wales (down by 9.7 per cent), West Midlands (down by 10.6 per cent), East Midlands (down by 5.1 per cent), East Anglia (down by 11.1 per cent), North West (down by 4.3 per cent), Yorkshire and Humberside (down by 5.2 per cent) and Scotland (down 12.9 per cent).

Phil Cotter concludes: "As predicted by Experian this time last year, limited company failures are more than nine per cent lower in 2003 than in 2002. Yet, despite the increasing rescue culture, there is still no excuse for complacency. Last year thousands of companies went to the wall at the rate of 70 per week, resulting in millions of pounds of bad debts, often at the expense of other UK businesses, consumers and the UK economy as a whole.

"To help protect themselves from losses when customers go bust, companies are well-advised to find out as much as possible about their existing and prospective customers, their financial status and payment performance. Credit checks are inexpensive and can be done quickly and easily over the Internet with access to reliable credit ratings easily available. Such checks can often make all the difference - providing businesses with invaluable information to make sound business decisions."