CashNews.co
UK businesses are increasingly opting for voluntary liquidation over compulsory measures, with the proportion of voluntary cases tripling in recent years. Quadient’s latest research reveals a sharp rise in voluntary liquidations, driven by external economic pressures and evolving business conditions.
A recent Freedom of Information (FOI) request by Quadient has unveiled a significant surge in voluntary liquidations among UK businesses. According to the data obtained from The Insolvency Servicethe ratio of voluntary to compulsory liquidations has more than tripled in the past decade, peaking at an unprecedented 25:1 in 2021. This marks a striking shift from the steady average of 2:1 seen before 2012.
The report highlights that, in 2023, one in every 272 UK businesses opted for voluntary liquidation—a record high this century. This trend reflects a growing preference among business owners to end operations on their own terms rather than facing court-imposed liquidation.
“There is no hard-and-fast rule on when a business enters voluntary liquidation,” said Joey Glazer, Director of AP Automation at Quadient. “These statistics cover many different cases, from operations with decades or centuries of history that could no longer control their finances, to one- or two-person bands that only needed to exist for a limited time. What’s certain is that, despite the name, many of these so-called “voluntary” liquidations will be anything but.
“Instead, people will be walking away because of external factors beyond their control, while seeking to retain whatever ownership of assets they can. For these businesses, and others looking to avoid the same fate, resilience to outside pressures is key. Businesses need to quickly spot when their finances might be getting into trouble, and ensure they both have fast cash flow and that their accounts are completely in order.”
The total number of insolvencies in the UK has increased from 1,563 in 1960 to 25,158 in 2023, with notable spikes during periods of economic hardship. The FOI data also identifies significant spikes in insolvencies in 1991-1992 and 2022-2023, correlating with broader economic crises such as the early 1990s recession and the ongoing cost-of-living crisis.
“Business leaders need to take control of their finances, so they have the flexibility to deal with the unexpected,” Glazer continued. “Tools like AI and automation are essential for reducing precious time and resources being spent on manual finance processes. And particularly as cash is king, automating financial processes means payments can be collected faster and leaders have an accurate, real-time view of their financial health.
“By optimising the finance function, businesses will have an awareness of how external factors might impact their bottom line and so can act accordingly. Primed with the latest technologies, businesses can face sudden external events with much greater confidence.”