IT insolvencies drop but caution remains

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IT insolvencies drop but caution remains

Simon Quicke

The number of IT firms hitting the wall dropped slightly in January as the number of insolvencies across UK PLC dropped.

The latest figures from Experian indicated that 37 IT firms failed at the start of this year but that was down slightly on the same period last year.

Over the entire spread of the economy 1,266 firms hit the wall with business services suffering 299 failures, building and construction 205 and leisure and hotels 101.

The Experian figures follow on from numbers covering Q4 from Graydon which showed that the number of channel players facing tough times could rise this year as bad debts rise and push some over the edge.

Mark Firth, managing director of Experian pH, said that overall the numbers for January were positive and it showed that the economy was recovering its strength.

"Our data shows that the post-recession business population is beginning to increase once again, with the net number of firms trading up by one percent when compared with last January," he said.

"Irrespective of the environment, firms need to be vigilant and ensure that they have good insight into the financial risks associated with insolvencies among clients and suppliers. With issues from fulfilling increased orders through to late payment, the knowledge of how these will affect cash flow is imperative," he added.

Other anecdotal evidence of an improving market came today with online accounting specialist E-conomic reporting a slow down in the number of customers running into financial problems.

"January showed the lowest churn rate in more than two years, " said UK Operations Director Anders Bjørnsbo. "And since the majority of our churn is due to companies closing down and going out of business then this has to be a really positive sign."

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