Misery ending? UK reseller insolvencies may have bottomed out Insolvency rates in the UK channel were back to pre-recession levels in Q2, according to official stats from credit reference agency Graydon UK. The picture is remarkably different to a year ago when reseller failures reached a nine-year high with 99 firms hitting the wall, a pattern that continued until the end of Q1 2012 …
There's surely going to come a time when things will start to look better because all of the weaker resellers have already failed? Perhaps the more interesting aspect would be to look and see what type of reseller is going insolvent now.
To put it into easier context, having 7-11s close down is not the same thing as having Asdas close down, while both could be grouped as "supermarket". The indicators there could be quite different.
While one agency comes out with statistics suggesting decline, others simultaneously say they are rising. This has always been the case so reading too much into this is from either perspective is wrong. Only when all say the same thing can one really judge the true position.
Resellers are more resilient but they also have to dig deeper to keep their heads above water. The spectre of creditors forcing closure has also diminished for a while and supplier credit is in abundance. Suppliers are loathing reducing or removing credit even in the face of less positive results and growing risk.
One fact many ignore is that Reseller clients and their markets may be the ones suffering the most in terms of insolvency, whether in Retail or construction. What has given many breathing-space is a slow but gradual shift to services and a realistic approach toward growth.
Banks remain less than supportive and the recent scandal of loans to small businesses that carried interest rate swaps and now the additional issues surrounding the behaviour of banks in ‘fixing’ Libor rates will undoubtedly add further pressure. When Banks are forced into corrective measure to address slaps on the wrist, inquiries, head-honcho resignations and capital base requirements, it’s the commercial business and consumer that inevitably pays. By far and away the biggest threat is funding, its cost and the ongoing global crisis.
Government data is typically months behind reality and often inaccurate and often revised months later. One thing that I see is that things are getting economically worse in almost all segments of society other than autos and new home construction in the U.S. So as usual life is good for those of means and everyone else is suffering and will continue to suffer as a result of bad government policies and economic mamagement.
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