The Business Disputes Register - promoting better business behavior globally

Our Mission is to encourage and promote better business behaviour.

Typical poor business practices include:

• Paying invoices late or not at all
• Non-fullfilment of contract
• Breach of terms
• Breach of confidentiality
• Copyright or trademark infringement
• Abuse of market power
• Industrial espionage
• Negligence

The most often cited dispute involving businesses is non or late payment of invoices. This is a major problem which has serious consequences on the whole economy. Key facts relates to late and unpaid invoices:

• 30% of invoices are not paid within the agreed terms
• Large companies tend to take 30% more time than small companies to pay invoices
• A government initiative to force larger companies (about 7000 companies) to publish payment statistics and practices has so far had no positive impact
• 1 in 5 insolvencies attributed to late payments (source: Trade body R3)
• Other consequences of late payments are paying own suppliers late, getting into increased debt and reducing salaries or paying staff late
• 90% of small company managers surveyed complain they do not have access to tools or information to assess whether they are trading with insolvent companies

Company Size

Other companies to be wary of are companies that are insolvent or close to insolvant. It is challenging to get up to date publicly available data rating a company's solvency, however thera eare many indicators that offer strong clues. For example:"

• Companies over 40 years old have higher insolvency rates than younger companies. Companies seem to go through a danger phase when they are 9 years old. 
• Age related insolvency trends vary considerably by industry. For example, very old restaurants tend not to become insolvent, whereas it is the opposite for newspaper publishing
• PLCs and three times more likely to become insolvent than private limited companies. 
• Surprisingly, analysis of UK data shows that companies with a year-end accounting date of July are more than twice as likely to go into administration than companies whose year-end is March.

Industry sector

Industry sectors most likely to become insolvent

Company age

On average, a company has a half percent chance of going into administration in any 12 month period. This average is misleadingly low because a very high proportion of companies are very young (young companies are unlikely to be insolvent in their first few months of existence). It is worth researching the age of the company you are dealing with because the insolvency rate changes significantly with age as can be seen in the adjoining chart.
Companies less than a year old are the least likely to go into administration within the next 6 months. This is not surprising as most start-ups have enough cash to last 18 months. However, the risk of going into administration shoots up during the first few months since the inception of the company reaching a first peak of 0.8% at 21 months. The companies that survive this first 21 month hurdle gain a reprieve as the administration rate drops to 0.55%, but only briefly as the rate starts to climb up again reaching a peak of just under 1% when companies reach 9 years of age.

After 9 years, the prospects steadily get better. Probably due to experience gained, the companies are now better run and more resilient. 14 year-old companies are probably the safest to do business with. However, after 18 years, the survival prospects steadily and slowly get worse over time, presumably because they are increasingly outdated and increasingly complacent as they get older. Interestingly, the survival prospects of companies over 90 years old start to improve with age. It should be noted that the above is a generalisation. The pattern varies for different industries as can be seen in the following 3 examples:

Restaurants

For the 54 thousand actively trading restaurants that are registered on Companies house there are 4 hurdles in a typical industry life-cycle. The first hurdle is at the 2 year mark where 3.75% of restaurants find themselves in non-voluntary administration. Once passed that hurdle the rate drops to 2.5% but only for 2 years when it shoots back up to a peak of 4% for restaurants that are about 5 years old. Thereafter the survivors face better prospects and the administration rate steadily declines to 1.8% for restaurants that are 15 years old. Presumably these restaurants now have an established clientele and they are getting better at managing their operations. However, after 15 years the restaurants seem to be going out of fashion or are facing new challenges as the administration rate climbs back up to nearly 4% again by the age of 21 years. Thereafter the survivors enjoy another 10 years of improving administration rates before reaching the fourth hurdle where the administration rate peaks for restaurants that are 37 years of age. Amazingly, based on Companies Data, out of 246 restaurants over 40 years old not a single one is in administration (at the time of writing); it seems that for restaurants older than 40 years old, age is an asset.

Company type

Counter-intuitively, Public Limited Companies are most likely to go into administration than any other type of company, this is despite (or perhaps due to) easier access to capital, regulatory oversight and public scrutiny. 

Company type	Number of companies sampled	% in administration
PRI/LTD BY GUAR/NSC (Private, limited by guarantee, no share capital)	52,986	0.11%
Community Interest Company	11,035	0.12%
PRI/LBG/NSC (Private, Limited by guarantee, no share capital, use of 'Limited' exemption)	24,287	0.14%
Limited Liability Partnership	36,725	0.37%
Private Limited Company	2,709,216	0.55%
Public Limited Company	3,845	1.74%

PLCs are more likely to survive the first two years of their existence than Private limited companies, however, thereafter they become significantly more likely to go into administration.

The Business Disputes Register (www.disputesregister.org) went online in 2018 with the purpose to collect details of commercial disputes and make them publicly available. The register is internationally available and for the benefit of all companies.

The register is owned and operated by: Resolution Technology Ltd, a company registered in the United Kingdom, company number 11705612, whose registered address is 128 City Road, London, United Kingdom EC1V 2NX