36
2015 A Year in Review
1
2015 A Year in Review
2
About Us 3
Executive Summary 4-7
Company Start Ups by Year 8
Company Start Ups by Quarter 9
Company Start Ups by Region 10
Company Closures by Year 11
Company Closures by Quarter 12
Company Closures by Age 13
Company Closures by Sector 14
Company Closures by Region 15
Predicting Insolvency 16
Credit Limit Prior to Insolvency 17
County Court Judgments (CCJs) 18
Total CCJ Value by Sector 19
Bad Debts by Region by Year 20
Bad Debts by Value by Year 21
Directors 22
Foreign Ownership 23
Credit Score by Sector 24-25
Average Credit Score by Region 26
UK Trade Payment Data 27
Payment Data Average DBT by Region 28
Average Days Beyond Terms by Sector (2015) 29
Average Days Beyond Terms by Region (2015) 30
Invoices 31
How our Rating Algorithm Works 32
Glossary 33-34
Introduction
‘2015 A Year in Review’ analyses data from the Creditsafe system to give an accurate overview of business
throughout the year of 2015. It includes information on company closures, company start ups, CCJ
information, bad debt and trade payment data; comparing figures to the previous two years to identify key
business trends in the UK economy.
2
Table of Contents
3
About Us
Creditsafe is the most used provider of online business credit information in the world, with over 85,000
customers across the globe and offices in nine different countries. We pride ourselves on the quality of our
data and hold information on over 140 million companies worldwide, giving you information on a company’s
status, payment data and much more. Our executive product suite consists of a range of business solutions
such as company credit reports, monitoring tools, marketing data, and debt recovery tools, all supported by
one of the most predictive credit scoring algorithms on the market, leaving you feeling secure that you are
making sound, informed business decisions based on the information you receive.
We offer both local and international company credit reports instantly available with online coverage in over
40 countries. We can also supply a freshly investigated company credit report on any company anywhere in
the world within 2-10 working days. All reports benefit from a standardised credit rating that allows you to
compare international companies to local ones.
Our data is collected from various reliable sources including Companies House, The Registry’s Trust and the
London and Edinburgh Gazette and detailed payment information collected from more than 85,000 businesses.
This data aids our predictive algorithm to produce our company credit reports.
4
Executive Summary
2015 has undoubtedly been a strong year for business across the UK. Looking beyond headline figures on the macro-economy, this analysis of Creditsafe’s databases reveals a true picture of the world of business by highlighting key statistics and trends.
4
5
The continued growth in new company start ups over the last three years is a really encouraging sign of the
level of economic activity and when taken with the decline in company closures we are seeing real growth in
the number of businesses across the UK. London continues to lead the way but it is also refreshing to see a
higher start up rate further afield with both Scotland and the North West outperforming the national trend.
Historically, failure rates tend to increase as we come out of recession but we now seem to have passed
through this period and it is interesting to note that businesses aged 3-10 years are the companies most likely
to fail. They are almost twice as likely to fail as businesses aged between 10 and 25 years and over 3 times
more likely to fail than businesses under three years old.
As so often the construction industry has rarely been outside the business newspaper headlines in 2015 and
our research suggests there was some rationale behind this, with the industry being named as the sector with
the most company closures in 2015, a total of 3,070 across the year. Construction and construction related
companies were also the most searched for companies on the Creditsafe system last year.
6
Away from start ups and failures the issue of late payment continues to be a hot topic and one that continues
to be an ongoing problem for many companies across the UK. An analysis of Creditsafe’s Trade Payment Data
figures has shown that while the average DBT (Days Beyond Terms) number is declining across the country,
the average is still well past two weeks after the due date, causing many difficulties for smaller businesses
in particular with smaller invoices often being paid later than larger ones. There is also a clear North-South
divide with companies in the North and Yorkshire in particular proving better at paying than their southern
counterparts – London still has a lot of catching up to do. In industry terms we can see public or quasi-public
sectors actually paying more promptly while the energy supply and construction sectors both ended the year
with an average DBT beyond 20 days.
Of course when that payment never arrives companies may be forced to go to court and 2015 actually saw
an increase in the number of County Court Judgments (CCJs) being issued. The average value has decreased
slightly compared to 2014 but still remains over £4,000. It was bad news again for the construction industry
with the highest total value of CCJs issued against them, well over £40 million, although they couldn’t match
the average CCJ value in real estate which was a surprising £17,381. Bad debt numbers have also declined
since 2014 along with the reduction in company failures, plus the total and average values have also reduced.
However the average value of £104,000 is still higher than it was two years ago.
7
Gender pay gaps plus a divide in leadership roles between men and women have also been in the news in
2015 and with good reason as our research shows that the ratio between male and female directors is still a
staggering 71:29%. This ratio has stayed consistent since 2013; and with both the number of male and female
directors increasing at a similar rate over recent years it is apparent that even with a growth in start ups this is
a gap that will take some time to close. The average age of company directors is also getting lower, dropping
to 53 for both men and women.
Creditsafe’s credit scoring system predicts how likely a company is to become insolvent, and the figures look
good for each sector across the UK with most regions and sectors average score remaining fairly stable and at
a level that should instill some confidence for the year ahead. However we know that sometimes businesses
do go wrong even in better times and it is encouraging to note that the Creditsafe system has had another
good year in predicting company failures before they happen.
8
500,000
510,000
520,000
530,000
540,000
550,000
560,000
570,000
580,000
590,000
600,000
2014
586,9392013
531,1812015
610,589
Star
t up
s
+4% +11%
Company Start Ups by Year
Number of newly incorporated limited companies
9
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
Q1 Q2 Q3 Q4
Am
oun
t o
f C
om
pan
ies
l 2
015
l
20
14
l 2
013
Company Start Ups by Quarter
2015 saw an increase in the number of start ups compared to 2014 in every quarter however as in previous
years the greater numbers are incorporated in the first half of the year.
2015 saw 610,589
company start ups
2014 saw 586,939
company start ups
2013 saw 531,181
company start ups
10
Scotland
NorthernIreland
Wales
WestMidlands
EastMidlands
EastAnglia
London
South EastSouth West
NorthEast
NorthWest
Yorkshire
Company Start Ups by Region
Start Ups 2015 2014 2013
East Anglia 69,847 5 67,242 5 60,396
East Midlands 21,415 5 20,588 5 18,633
Greater London 191,515 5 183,716 5 165,629
Northern Ireland 7,317 5 6,531 5 6,118
North East 11,711 6 11,720 5 10,387
North West 62,308 5 58,122 5 52,178
Scotland 34,787 5 32,002 5 30,413
South East 66,467 5 66,057 5 61,253
South West 37,210 5 35,878 5 33,439
Wales 15,347 6 15,893 5 14,884
West Midlands 49,396 5 48,599 5 41,847
Yorkshire 41,998 5 39,389 5 34,646
Other* 1,271 5 1,202 6 1,358
Total 610,589 586,939 531,181
*Includes companies registered in England and Wales with a business address outside mainland UK.
Encouragingly, in 2015 the number of start ups has increased in almost every region with just a small drop in
the rate of growth in Wales and the North East. Unsurprisingly London has seen the largest number of new
incorporations although both Scotland and the North West have seen growth at a faster rate.
11
Company Closures by Year
5,000
2013
2014
2015
10,000
15,000
20,000
25,000
30,000
5,000
2015
2014
2013
10,000
15,000
20,000
25,000
30,000
As the economy grows we can
see the rate of company closures
continuing to fall with the
number of failures down 24%
against 2014 which saw a drop of
14% against 2013. This is a good
indicator of economic strength,
especially when taken with the
on going rise in the number of
start ups.
-14%-24%
12
Company Closures by Quarter
While we have seen a significant drop in the number of insolvencies across the year, it is interesting to note that
the greater part of this was in the first two quarters of 2015; while quarters 3 and 4 both saw small increases on
2014 which may be a warning sign as we move into the New Year. The rate remains well below that for 2013 but
should be monitored.
2015 saw 19,067
company closures
2014 saw 24,959
company closures
2013 saw 29,139
company closures
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Q1 Q2 Q3 Q4
Am
oun
t o
f C
om
pan
ies
l 2
015
l
20
14
l 2
013
13
Company Closures by Age (2015)
0 - 3
3 - 10
10 - 25
Age of Business (years)
> 25
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
09,779 4,607 1,8182,842
Our research shows that businesses aged between 3 and 10 years appear to have the greatest number of
failures. Although the number is declining year on year it is interesting to note that this is the time at which
companies appear to be most vulnerable to failure.
Am
oun
t o
f co
mp
anie
s
14
Company Closures by Sector
- 500 1,000 1,500 2,000 3,000
Agriculture Forestry and Fishing
Mining and Quarrying
Manufacturing
Electricity; Gas; Steam Conditioning Supply
Water Supply; Sewerage; Waste Mgmt and Remediation
Construction
Wholesale and Retail
Transportation and Storage
Accommodation and Food Services
Information and Communication
Financial and Insurance Activities
Real Estate
Professional; Scientific and Technical Activities
Administrative and Support Service Activities
Public Administration; Defence Compulsory Social Security
Education
Human Health and Social Work Activities
Arts; Entertainment and Recreation
Other Services
Activities of Households as Employers
Activities of Extraterritorial Organisations and Bodies
2,842 2,500 3,500
Amount of companies
15
Scotland
NorthernIreland
Wales
WestMidlands
EastMidlands
EastAnglia
London
South EastSouth West
NorthEast
NorthWest
Yorkshire
Company Closures by Region
Closures 2015 2014 2013
East Anglia 1,625 6 1,888 6 2,923
East Midlands 1,151 6 1,176 6 1,432
Greater London 3,215 6 5,690 6 6,775
Northern Ireland 563 5 540 6 667
North East 404 6 639 6 699
North West 2,280 6 3,547 6 3,949
Scotland 1,345 5 1,132 6 1,355
South East 1,927 6 2,498 5 2,192
South West 1,341 6 1,409 6 1,814
Wales 672 5 589 6 609
West Midlands 1,526 6 2,515 6 2,651
Yorkshire 2,922 6 3,283 6 3,984
Other* 96 5 53 6 89
Total 19,067 24,959 29,139
While it is reassuring to see the number of failures reducing across the country, Wales, Scotland and Northern
Ireland have bucked the trend with a small yet noticeable increase in both nations. London has seen the
greatest decrease in the number of closures.
*Includes companies registered in England and Wales with a business address outside mainland UK.
16
Predicting Insolvency
If we analyse the risk profile in the period before insolvency we can see that Creditsafe deemed on average over
65% of all failed companies as being ‘high risk’ prior to their failure. Creditsafe continues to achieve this high
level of predictability whilst rating just 3% of all UK companies as ‘high risk’ on the Creditsafe database.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Per
cent
age
of
Co
mp
any
Failu
res
l Very High / High Risk (0-29) Prior to Insolvency l Moderate Risk (30-50) l Low Risk (51-70) l Very Low Risk (71-100)
17
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1 Q2 Q3 Q4
No Limit £1- £1,000 £1,001 - £10,000 £10,001 - £50,000 £50,000+
Credit Limit Prior to Insolvency
In addition, Creditsafe advised that there should be no recommended credit limit to nearly two thirds of
insolvent companies prior to their failure in 2015.
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While there was a small increase in the number of CCJs issued in 2015 as against 2014, the number is still 6% down on 2013. Average CCJ value has also fallen but remains over £4,000 which can be a significant sum to reclaim for a struggling smaller business.
County Court Judgments (CCJs)
Average value £4,266 in 2015
Average value £4,630 in 2014
19
Total CCJ Value by Sector (2015)*
0 10m 20m 30m 40m 50m
CCJ Value (£)
Agriculture Forestry and FishingMining and Quarrying
ManufacturingElectricity; Gas; Steam Conditioning Supply
Water Supply; Sewerage; Waste Mgmt and RemediationConstruction
Wholesale and RetailTransportation and Storage
Accommodation and Food servicesInformation and Communication
Financial and Insurance ActivitiesReal Estate
Professional; Scientific and Technical ActivitiesAdministrative and Support Service Activities
Public Administration; Defence Compulsory Social SecurityEducation
Human Health and Social Work ActivitiesArts; Entertainment and Recreation
Other ServicesActivities of Households as Employers
Activities of Extraterritorial Organisations and Bodies
*CC
Js is
sued
in 2
015
We can see the industries with the most CCJs as a warning sign of potentially poor payment performance
which is also reflected in our payment analysis. While most CCJs are around the national average in terms of
value those in real estate are on average well over £17,000.
20
Scotland
NorthernIreland
Wales
WestMidlands
EastMidlands
EastAnglia
London
South EastSouth West
NorthEast
NorthWest
Yorkshire
Bad Debts 2015 2014 2013
East Anglia 4,826 6 5,150 6 6,033
East Midlands 1,903 6 2,101 6 2,714
Greater London 6,538 6 8,473 6 9,904
Northern Ireland 103 6 116 6 137
North East 1,227 6 1,294 6 1,604
North West 5,464 5 5,366 6 6,714
Scotland 733 6 885 6 1,139
South East 5,816 6 6,493 6 7,734
South West 3,208 6 3,242 6 4,084
Wales 1,175 6 1,445 6 1,694
West Midlands 5,638 6 5,962 6 7,397
Yorkshire 4,646 6 4,974 6 6,162
Other* 51 5 48 6 53
Total 41,328 45,549 55,369
As the number of company closures has declined in the last three years we can see the expected reduction in
the number of bad debts left to businesses after a company is finally liquidated. Unsurprisingly the greatest
number can be seen in the London region.
Bad Debts by Region by Year
*Includes companies registered in England and Wales with a business address outside mainland UK.
21
Bad Debt by Value by Year
After a significant rise in total and average values from 2013 to 2014 we see a noticeable decline in 2015.
However the average bad debt is still in excess of £100,000 which can represent a significant burden for
businesses who cannot recover these debts.
£-
£2.5m
£5.0m
£7.5m
£10m
2015 2014 2013
Value of bad debt Number of bad debts issued
0
20,000
40,000
60,000
Val
ue o
f B
ad D
ebt
Average value
£180,000Average value
£104,000Average value
£60,000
Num
ber
of
Bad
Deb
ts
22
Directors
The number of company directors has steadily increased over the past three years however the gender
balance has remained steady with 71% of directors being male against just 29% female.
Men and women directors both had an average age of 53 in 2015.
5,000,000
4,000,000
3,000,000
2,000.000
0
Female Directors 2,003,575
Male Directors 4,932,342
Male
71%Female
29%
Num
ber
of
Dir
ecto
rs
23
Foreign Ownerships
A UK company that is in a Group Structure has an average of 4 subsidiaries.
Costa Rica25,793
USA22,892 Virgin Isl.
15,480
Jersey7,644
There are 493,089 companies in the UK and Northern Ireland that have a Group Structure.
181,251 companies have a foreign ultimate holding company.
5% of companies in the UK are owned by a foreign company.
24
Credit Score by Sector
Average credit score in each industry 2015 2014
Activities of Households as Employers 83 5 81
Education 75 5 70
Information and Communication 74 5 70
Professional; Scientific and Technical Activities 74 5 69
Human Health and Social Work Activities 73 5 68
Mining and Quarrying 72 5 69
Agriculture Forestry and Fishing 72 5 70
Public Administration; Defence Compulsory Social Security 71 5 68
Arts; Entertainment and Recreation 69 5 65
Financial and Insurance Activities 68 5 65
Other Services 67 5 65
Each industry’s average credit score has remained consistent or has improved in 2015 compared to 2014.
They are all on average deemed as creditworthy on the Creditsafe system.
25
Average credit score in each industry 2015 2014
Administrative and Support Service Activities 65 5 62
Real Estate 64 5 63
Activities of Extraterritorial Organisations and Bodies 60 5 51
Manufacturing 59 5 57
Transportation and Storage 59 5 57
Wholesale and Retail 58 5 57
Electricity; Gas; Steam Conditioning Supply 55 4 55
Water Supply; Sewerage; Waste Mgmt and Remediation 55 5 54
Construction 54 4 54
Accommodation and Food Services 50 4 50
26
East Anglia
60
East Midlands
61
Greater London
61
Northern Ireland
59
North East
59
North West
60
Scotland
63
South East
63
South West
62
Wales
60
West Midlands
60
Yorkshire
61
Scotland
Wales
WestMidlands
EastMidlands
London
South EastSouth West
NorthEast
NorthWest
Yorkshire
61
63
59
60
6362
6060
NorthernIreland
EastAnglia
60
6159
Average Credit Score by Region
Average credit score in each region in 2015
27
UK Trade Payment Data
Number of reports with an experience
1,107,891Total number of experiences
90,099,716Number of Suppliers
1,627
Trade payment data allows you to see a company’s payment habits based on the real life experience of their
suppliers. The Creditsafe Trade Payment Data Programme is one of the most comprehensive in the industry
showing you how well over 1,000,000 UK businesses pay their bills and helping you set appropriate terms of
business.
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Payment Data Average DBT by region
There is a clear North-South divide with companies in
the North paying their bills more quickly than those
in the South and particularly London; the national
average is also still well over two weeks beyond terms.
Average DBT in each region in 2015
East Anglia
16
East Midlands
16
Greater London
18
Northern Ireland
16
North East
16
North West
16
Scotland
17
South East
17
South West
17
Wales
19
West Midlands
18
Yorkshire
16
29
Education and international bodies are the best paying sectors across the country, paying their bills on
average 11 days beyond terms. The energy supply sector was clearly the worst paying a massive 29 days
beyond terms on average. In addition the two sectors that featured heavily in the CCJ league table –
construction and real estate are also prominent late payers.
Average Days Beyond Terms by Sector (2015)
Sector DBT
1. Education 11
2. International Bodies 11
3. Health & Social 12
4. IT & Comms 13
5. Motor Vehicle Trade 13
6. Entertainment 13
7. Hospitality 13
8. Financial & Insurance 14
9. Agriculture, Forestry & Fishing 14
10. Public Administration 15
Sector DBT
1. Energy Supply 29
2. Construction 21
3. Mining & Quarrying 20
4. Business from Home 20
5. Professional & Scientific 19
6. Business Admin & Support 19
7. Real Estate 18
8. Water & Waste 16
9. Manufacturing 15
10. Transportation & Storage 15
5Top 10 Best Paying Sectors 6Top 10 Worst Paying Sectors
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Average Days Beyond Terms by Invoice Value
Our research suggests that invoices over £20,000 are paid the fastest in the UK. Unfortunately for smaller
companies dealing with smaller invoices, the average time it takes for bills between £100-£999 to get paid is
18 days beyond terms; the longest waiting time in the UK.
Invoice Value (£) Avg DBT 2015
0-99 16
100-499 18
500-999 18
1000-4999 17
5000-9999 15
10000-19999 14
20000+ 12
Q1 8,416,504
Invoices Raised
Q2 9,019,823
Invoices Raised
Q3 5,891,927
Invoices Raised
Q4 2,284,128
Invoices Raised
31
62% 67%51% 53%
38% 33%
49% 47%
Q1 Q2 Q3 Q4
% Invoices Paid Late % Invoice Paid within terms
Invoices
Per
cent
age
Sadly throughout the year more invoices get paid late than on time although whether the improvement
towards the latter half of the year and the difference to the quarter one figure reflects companies’ financial
year ends is unclear.
32
How our Rating Algorithm Works
The Creditsafe Rating Model is a highly predictive analysis tool that uses the latest advanced statistical
techniques. It combines commercial and other key information, including trade payment information, public
information, key financial ratios, industry sector analysis and other performance indicators which provide
Creditsafe customers with a view of their existing and future customers. The Creditsafe Rating Model predicts
the likelihood of a company failing within the next 12 months.
Our rating model was created by our analytics team who looked at companies that failed over a 12 month
period and assessed the commonalities within these failures. We compiled hundreds of variables and looked at
the weighting each variable carried along with the impact each variable had on the failed businesses. We then
selected a number of variables which were compiled together to create the modules.
33
Company Failures - A failed company is a business that has entered into insolvency procedures and has been
dissolved. Creditsafe considers the following criteria to be the definition of failure:
• In Receivership / Liquidation • In Administration
• Administrator Appointed • In Receivership / Administration
• Appointment of Liquidator • Administrative Receiver Appointed
• Meeting of Creditors • Administration Order
• In Liquidation • Company is liquidated or is wound-up
Bad Debt - Creditsafe captures bad debt information based on the information within a ‘Statement of Affairs’
when a company enters liquidation. A Statement of Affairs is a document detailing a company’s assets and
liabilities. Generally prepared by a liquidator or appointed professional during certain insolvency proceedings,
the document is later registered at Companies House. In the document the creditors are listed which helps
identify companies who have obtained a bad debt. Bad debt can occur for a number of reasons, including
customer insolvency or protracted default. Often business owners don’t have the financial resources or access to
advice to pursue legal action.
Glossary
34
Glossary
CCJ - A CCJ is a judgment that a County Court issues when a company has failed to pay money that they owe.
When a creditor owes money to a debtor, the debtor can apply to the County Court for a judgment (CCJ) against
the creditor to claim the money. The Court will decide whether there really is a debt to pay and if there is, they will
issue a CCJ.
Trade Payment Data - Late payment is a problem for businesses all over the world. By including accurate,
relevant up-to-date trade payment data in our company credit reports we can help customers see just how
businesses pay their bills and set terms accordingly. The data allows us to map an accurate picture of a
company’s payment performance and see how they rank against their industry on how they pay their bills. We
have a number of market leading suppliers but are always keen to have more partners join our programme in
order to deliver a true picture of how businesses’ pay their bills in the real world to real companies - not just the
big suppliers.
The data for this book was extracted by David Walters and his team of data analysts from the Creditsafe system. Editorial and analysis was written by Chloe Thomas and the booklet was designed by Matthew Miles.
For any enquiries regarding this booklet or any other press queries, please contact Chloe Thomas at [email protected]
35
www.creditsafeuk.com
Talk to a credit risk consultant today 02920 886500 www.creditsafeuk.com
Discover how Creditsafecan help your business
64
Company Name Painting Ltd
Company Number 012356
Registered Address Cardi�, United Kingdom
Website Address www.paintingltd.com
Telephone Number 01234
Incorporation Date 18th June
SIC Description Other Service
£5000 £3000 Active Active 20
Credit Limit Contract Limit Status DBT Industry DBT
Payment Trend
Summary Directors/Shareholders Financials Event History Group Structure
Rating
Does this company owe you money?
Company Credit Report
36
Creditsafe UK Bryn House,Caerphilly Business Park,Van Rd,Caerphilly,CF83 3GR
Tel: 02920 886500Fax: 02920 856545 Web: www.creditsafeuk.com twitter.com/creditsafeuk facebook.com/creditsafeuk linkedin.com/company/creditsafe Registered in Wales. Company number: 03836192
