The latest insolvency index from Experian shows that the total number of insolvencies fell 12.5 per cent in February year on year, and that the smallest companies shared the lowest insolvency rate with the largest firms.
Experian categorised small firms as those with one to two employees, and the largest firms as those with 501 or more staff, and these groups both showed an insolvency rate of 0.06 per cent and 0.09 per cent respectively.
The insolvency rate was calculated by comparing the proportion of small businesses which failed out of the total small business population.
The report shows that Scotland saw the biggest increase in the rate of insolvencies during February, rising to 0.11 per cent from 0.08 per cent in February last year. In total, there were 60 business failures across Wales in February 2011 compared to 45 in the same month in 2010.
Greater London and the north west saw the highest number of business failures in February, with 366 and 194 respectively. But these were still significantly lower than last year.
Yorkshire saw 155 corporate insolvencies during February compared to 156 in the same month last year, while the west midlands experienced 143 failures, a drop from 155 year on year. Scotland saw the great improvement with the lowest insolvency rate – at 0.06 per cent.
Max Firth, managing director of pH, an Experian company, said: “The period of stability for businesses in the UK continues to head in a positive direction overall. However, whilst smaller and larger companies are improving, insolvency rates for the midsized companies (20 to 100) continue at the same rate month on month.”
Firth said this could mean that in more challenging times these firms fall victim to being too large to be flexible, and too small to rely on a solid, established business structure and long term contracts.
He added: “The continued demise of the food retailing sector is also significant, with the declining financial strength of the industry an indication that smaller independent grocery traders are suffering.
“Businesses can use insight such as insolvency rates and financial strength as a guide to which sectors and size of businesses may need enhanced risk management so signs of distress aren’t missed.”