Umbrella company contractors may be interested to learn that Equifax, the information solutions provider, has revealed that the number of business failures has been increasing since the start of the new financial year.
The number of firms failing showed a year-on-year drop of 5.9% in the first quarter of 2011 but a 1.5% increase during April and May.
The best performers in the first quarter were manufacturing and services, showing a year-on-year decrease in failures of 14.8% and 10.9% respectively. The construction industry on the other hand showed a year-on-year increase of 1.4% during the same period.
Although it is good news that we are seeing fewer companies failing, the financial health of firms in the UK deteriorated in the six months to April, according to the most recent SME Trends Index. The overall Business Health Index, which looks at bad debts, arrears of tax, profitability and turnover, fell to 0.35 from last November’s figure of 0.49.
576 business owners were surveyed for the Index and just over three quarters of them said operating costs had risen over the past six months, and just 58% of them had secured new contracts.
Companies turning over in excess of £3 million are still significantly stronger than firms with a turnover of less than half a million. The best performing region was Wales, followed by the East of England and the South East.
Wholesale businesses showed promise in the six-monthly index whilst both the haulage sector and the construction industry recorded negative readings.
The research was compiled by Hilton-Baird Financial Solutions and the company’s MD, Evette Orams, said the results showed that trading conditions are still challenging and the financial health of SMEs is deteriorating probably because of the rise in VAT and the government’s austerity measures.
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Image: kiraffi kaffella by ansik
