Commenting on the need for more support for businesses in response to the rise in the number of insolvencies, Andrew Dixon, executive director for specialist finance at Bibby Financial Services said: “The latest figures highlight the urgent need for a more effective approach to supporting businesses, particularly small and medium sized enterprises.
“The Business Factors Index which we have just published for the fourth quarter of 2011, revealed that 66 per cent of business owners had not applied for any external funding in the previous 12 months, and that more were in fact relying on personal savings and bank overdrafts as sources of funding.
“Just four per cent of business owners said they had applied for any government funding initiatives such as the Business Growth Fund or Enterprise Finance Guarantee. What this tells us is that a lack of funding is one of the factors contributing to the rise in the number of insolvencies.
“It is critical for the recovery of the economy in 2012 that businesses are able to grow and to seek new markets for example overseas and to boost the level of exports.
“But the financial services industry needs to work together in partnership with government agencies to develop much greater awareness of all the range of funding options that are available to support businesses in the UK and prevent the scale of failures we have seen with these latest insolvency figures.
“Recent data from the Asset Based Finance Association revealed that the level of funding increased through products such as invoice finance, which enables businesses to improve their cashflow and liquidity, as well as invest in growth and importantly bridges that gap between issuing an invoice and getting paid.
“It can apply to a range of businesses from those looking to start-up, or growing their company, through to those that have been trading for a long time and for firms looking to restructure their finances. It is also suitable for industry sectors such as manufacturing, wholesale, the service industry as well as transport and construction.
“For businesses which are looking to move into a period of growth in 2012, now is the time to explore all the funding options available and collectively we should act to bring down the number of insolvencies every year.
“Because behind the statistics is a very human story where people put their heart and soul into running their business and it can be devastating to reach the point of insolvency for all concerned.”