Business Health Improving, but Not Fully Recovered

April 21, 2011
miproconsulting
News

CFO.com’s Alix Stuart: Business Failures Down, but Not Done:

Bankruptcy has been in the headlines recently, thanks to the high-profile Chapter 11 filings of companies such as gourmet-food retailer Harry & David and bookseller Borders. But business failures overall have been declining, according to the most recent data from Dun & Bradstreet. Formal bankruptcy filings in 2010 were down more than 5% from 2009, while a broader estimate of business failures fell about 13.5%.

That doesn’t mean the economy is out of the woods, though. The failure rate is still high in many industries, as is the percentage of delinquent payments, a leading indicator of bankruptcy risk.

“We’re seeing that the economy is improving, but there’s still a high degree of failure risk in the system,” says Andrew Lobsenz, senior vice president of global D&B risk-management solutions. If the recovery happens too slowly, “failure rates could kick back up rather quickly,” he warns.

Despite the tone of the article, the is good news. (It’s all to easy to focus on big-name Chapter 11 filings and in the process ignore the larger trend). The risk, obviously, is that the recovery needs to keep building momentum and not falter. From everything we’re seeing and reading, things are coming along nicely, albeit slowly.

From where you sit, how is the the recovery progressing? What are your experiences?

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