Phil MeekinView Profile
As the UK economy continues to strengthen, the number of both corporate and individual insolvencies also continues to fall. According to the Insolvency Service, recent statistics show total company insolvencies in England and Wales were at the lowest level since Q4 2007. However, individual insolvencies were at the lowest level since Q3 2005.
This is excellent news for the UK economy but it means there is less work available for the insolvency industry. Like any other business, the key to surviving when your market is shrinking is flexibility; the ability to adapt and change with the marketplace.
Most people, except those working in or close to the insolvency profession, probably have limited knowledge of what we do and how we do it. Media headlines spring to mind, “Jobs at risk as Administrators appointed“. It is not surprising that the insolvency industry is associated with redundancies, bad debts and bad news in general. But there is more to insolvency than “busting” companies. The reality is that a great deal of positive work is done to help struggling businesses to survive.
In a recent report entitled “Why Insolvency Matters” produced by R3, the trade association for Insolvency Professionals, it was estimated between 2013 and 2014, some 2,070 businesses in the North of England were rescued. It went on to suggest that over 90,000 jobs were also saved and 15,765 individuals helped through an insolvency procedure.
Insolvency practitioners can also be heavily involved in arranging various types of commercial finance and refinance. In some cases they may be instrumental in introducing investors and spending many hours giving advice.
So where does this leave the insolvency industry? I think in response to changing market conditions we are already seeing a greater focus on helping turnaround struggling businesses and helping to avoid insolvency.
Unfortunately, there is a hesitance by many business owners to seek advice as soon as financial problems arise. By taking advice early, there are still lots of options available. Perhaps there is a lack of awareness of what help is available and the misconception that insolvency practitioners only act as commercial undertakers. In business terms, what may be perceived as a “lost cause” can often be saved. Insolvency practitioners are very practical people – salvage experts for when businesses go through a rough patch. If you manage such a business, the best chance of survival is to seek professional advice without delay.