Credit Score research done by R3 has found that the number of UK businesses at a higher than average risk of insolvency has risen steadily over the last year.
R3, the trade association for the UK’s insolvency, restructuring, advisory, and turnaround professionals, carries out this research monthly, and uses data from Bureau van Dijk’s Fame to help with their research.
An overview of the research and findings
R3’s research is done for the UK as a whole, and a breakdown of the figures is created for each region.
To define the risk of insolvency, they consider the following factors:
- credit scores, with 1-18 meaning 'high risk' and 19-36 meaning 'caution'
- 11 key industry sectors, as defined by primary/secondary SIC codes
This month’s research has found that the number of UK companies at elevated risk of insolvency has risen steadily over the last year.
In April 2017, 25.3% of active companies in the UK were at a higher than normal risk of insolvency. And now, 12 months later, that figure has risen to 39.1%.
How Fame was used
The credit scores used by R3 for their report are calculated on Fame, Bureau van Dijk’s database of companies in the UK and Ireland.
These calculations are done by looking at the information held for each company on the database, including:
- a company’s turnover
- the directors’ track records
- their balance sheets
Jo Tacon, communications officer at R3, said:
The monthly Credit Score research is really useful in R3’s press and public affairs work. We use the figures derived from it in briefings for politicians and the media, and to give context to our commentary on insolvency and restructuring issues. There’s a lot we couldn’t do without access to the Fame database.