Failure rate in business services sector remains below average

The sector, which includes market research and polling agencies, data services companies and ad agencies, saw 0.09% of firms close their doors in December, well below the rates reported in some industries such as food manufacturing, plastics and rubber, and hiring and leasing, all of which saw a failure rate more than three times as high.

The figure of 0.09% was unchanged from December 2008, while the total number of firms failing was down 4% to 491.

The sector’s ‘financial strength score’, which predicts the likelihood of businesses making it through the next 12 months based on data such as payment histories and financial accounts and provides a score on a scale of 1-100, was up to 81.82 for December 2009 compared to 79.52 the previous December.

It was also marginally above the average financial strength score for all UK businesses, which was 81.37 over the course of 2009, and well above the score for companies in sectors such as plastics and rubber, food retail and postal and telecommunications.

The average figure for all sectors was up from 79.46 in 2008, which Experian said painted a slightly healthier picture of the UK business landscape.

Rolf Hickmann, managing director of Experian-owned marketing analytics firm pH, said: “In 2009 businesses in Great Britain managed to climb back to a better place financially… Many more businesses are taking steps to protect themselves from the risks of not getting paid, the impact on them if a key supplier or customer goes bust and indeed the risk of insolvency within their own businesses.”