Real insolvencies more than four times the volume stated in new PWC report

A report from PWC that suggests insolvencies have only increased 11.8% is a gross distortion of the true challenge facing UK small businesses.

The actual number of insolvencies has increased by an alarming 49.7%, when solvent liquidations are excluded, and the UK Government needs to act.

Gary Brown, Founder of Debt Register, a commercial collections platform, has analysed the figures in PWC’s latest ‘Restructuring Insights’ that states that insolvencies across all types rose from 28,279 in 2021 to 31,606 in 2022, a rise of just under 12%.

But if solvent liquidations are excluded, which they should be, that figure could be as high as 50%, Gary claims: “Businesses that are solvent and choose to liquidate are not failing businesses or else they wouldn’t be solvent!” Gary explains.

“They are simply going through a process to cease trading and close the business – and that could be for any number of reasons such as retirement – and should therefore be discounted. By doing that, you get to see the real scale of the disaster facing UK small businesses, and just how many are now becoming ‘insolvent’.”

Most SMEs fail because of rising costs and falling revenues, according to regular polling by the Federation of Small Businesses (FSB), but also because of poor cashflow management. According to the ICAEW, late payment hit a two-year high in the last quarter of 2022, putting enormous strain on businesses that may already be struggling.

Gary is concerned that reports that don’t give the true picture may lead Government ministers to become complacent: “The tsunami of insolvencies long predicted is actually happening, and ministers need to be actively promoting the importance of best-practice credit management and technologies that can help businesses improve their cashflow and protect them through the tough times ahead,” he adds.