What December 2023’s Insolvency Statistics Could Mean For Your Business
As 2024 gets underway, many businesses are reflecting on the calendar year just gone and examining what went well and what could be improved moving forward. The insolvency statistics published each month by the Insolvency Service are a valuable tool for anybody undertaking this analysis and, now that the latest insolvency statistics from December 2023 are out, businesses can obtain a complete understanding of their performance in a wider context.
Each set of monthly insolvency statistics follows the same structure and provides specific details of the number of compulsory liquidations, creditors voluntary liquidations (CVLs) and administrations in comparison to the same month in the previous years. To help you dissect the numbers published and understand what they might mean for your business, we have pulled out three key messages from December 2023’s insolvency statistics.
December Capped Off A Difficult Year
2023 was undoubtedly a difficult year for many businesses in the UK. Consumer spending slowed as inflation remained high and businesses had to deal with rising overhead costs and energy bills. For many, profit margins tightened or declined, and some were simply unable to weather the storm.
Concrete evidence of these difficult trading conditions is provided in the latest insolvency statistics as the number of registered company insolvencies in December 2023 was 2,002, 2% higher than the same month in 2022. R3, the UK’s insolvency and restructuring body, also comments that December’s company insolvency numbers are the highest for December in four years. While these headlines undoubtedly make for troubling reading, they should also reassure company directors that they are not alone if 2023 was difficult. Having come out the other side, it is therefore essential that businesses plan appropriately and seek advice if they are concerned about their resilience after a difficult year.
Be Aware Of Seasonal Income Boosts
For businesses that have weathered the storm and stayed solvent in a period when many could not, it is essential to be aware of why this might have been possible. Christmas is historically a strong trading period and therefore businesses should not be complacent about their own successes in the wider context of a challenging month.
Nicky Fisher, president of R3, also comments on the need to be cautious moving into the first few months of the New Year. She highlights how many businesses may experience a ‘festive income boost to cover the shortfall in their income’ over December but emphasises that struggling businesses may need to rely on a similar boost during the more difficult New Year trading period. It is therefore important to be aware of the seasonality of income and keep a close eye on things should the tide turn again in January and beyond.
Demand For Support Tipped To Increase
A particularly interesting takeaway from December 2023’s insolvency statistics is the fact that the overall rise in company insolvencies can be attributed to an increase in CVLs and Company Voluntary Arrangements. Compulsory liquidation numbers, on the other hand, were lower than the same month in the previous year. This demonstrates that growing numbers of businesses are making a conscious choice to seek professional advice about their financial position, rather than letting control slip and potentially face being issued a winding-up petition.
As difficult operating conditions show no signs of going away, it is therefore likely that more businesses will look for the most appropriate way to tackle insolvency and seek the advice of a professional. Should you be concerned about your own position, you should seek this advice as soon as possible. By speaking to a professional at the first signs of worry or trouble, the higher the chances of finding a solution that works best for your business.
The team of licensed insolvency practitioners at My Liquidation can provide you with transparent and trustworthy advice right away. Don’t hesitate to get in touch with us, whether you are concerned about your business after a challenging year or simply wish to understand all of the options available to you moving forward.
