22,455 Businesses Entered Insolvency in 2025: 5 Ways Devon Firms Can Stay Ahead

The Insolvency Service’s latest demography figures make for a surprising read. In England and Wales in 2025, there were 22,455 business insolvencies, a rate of 116 per 10,000 businesses. That is roughly level with 2024 (117 per 10,000), but a long way above the 88 per 10,000 recorded in 2019.

Two things stand out for anyone trading in Devon. The sector with the highest insolvency rate in 2025 was accommodation and food service activities, at 268 per 10,000 businesses. And it was mid-sized firms, those with 10 to 249 employees, that fared worse than micro businesses, along with those turning over between £250,000 and £50 million.

What the Numbers Actually Mean for Devon Businesses

Business insolvency in the UK has settled at a level well above where it sat before 2020, and it has not meaningfully fallen. For Devon, where so much turnover depends on a few busy months and on sectors already carrying the highest insolvency rates nationally, that is a reason to be deliberate rather than anxious.

The businesses that come through difficult trading conditions are usually not the ones with the biggest margins. They are the ones that saw the problem early, knew their numbers, and asked for help while they still had choices. Below are five practical things Devon business owners can do to stay ahead of financial trouble, rather than react to it.

1. Watch Cash Flow Weekly, Not at Year End

Most businesses that run into difficulty were profitable on paper for a while first. Profit is an opinion; cash in the account on the 28th is a fact. The gap between the two is where a lot of Devon businesses come unstuck.

A rolling 13-week cash flow forecast is the single most useful document a small business can keep. It does not need to be clever, a spreadsheet with money in, money out and a running balance is enough. What matters is updating it every week so you spot a shortfall in September rather than discovering it in November.

Seasonality makes this sharper here than in most counties. A café in Salcombe or a holiday park near Woolacombe can have a strong summer and still be squeezed by February, because the costs carry on after the visitors leave. Build the quiet months into the forecast while the tills are still busy.

2. Get Honest About What You Owe and When

Liabilities have a habit of accumulating quietly. A bounce back loan still running down, an asset finance agreement on a van, a VAT bill, PAYE, a director’s loan, a supplier who has let the balance drift. Individually each one is manageable. Added up and mapped against the same 13 weeks, they sometimes tell a different story.

List every debt with the balance, the monthly cost, the interest rate and the end date. Then check which are personally guaranteed, because that materially changes your exposure if things go wrong. Plenty of owners genuinely do not know which of their facilities carry a personal guarantee until they need to.

Tax arrears deserve particular attention. Falling behind with VAT or PAYE is one of the more common early signals of a business under strain, and HMRC would generally rather agree a Time to Pay arrangement before a debt becomes entrenched than chase it afterwards.

3. Chase Overdue Invoices

Late payment is one of the most common pressures on small firms, and it is also one of the few problems you have direct control over. If your terms are 30 days and your customers routinely pay at 60, you are effectively lending them working capital for free.

• Put payment terms in writing on every quote, contract and invoice, not just the invoice.
• Invoice the day the work is done, not at the end of the month.
• Send a polite reminder before the due date, then follow up on day one of it being overdue.
• Credit-check new trade customers before you extend terms, particularly for larger jobs.
• Know your rights. Under the Late Payment of Commercial Debts legislation you can usually charge statutory interest at 8% above the Bank of England base rate plus fixed compensation on overdue commercial invoices.

Most owners never invoke statutory interest, and that is fine. Simply mentioning that the right exists tends to move an invoice up someone’s payment run.

4. Learn the Warning Signs Before They Compound

Financial difficulty rarely arrives overnight. It builds, and the signs are usually visible months in advance if you are willing to look at them squarely.

Watch for the overdraft becoming your normal working balance rather than a buffer. For paying suppliers in a deliberate order because there is not enough to pay them all. For taking new borrowing to service existing borrowing. For HMRC payments slipping, for creditors phoning rather than emailing, and for that familiar feeling of putting off opening the post.

None of these individually means a business is failing. Two or three of them together, month after month, mean the trend is going the wrong way and needs addressing rather than absorbing.

5. Take Advice Before It’s Needed

There is a point where cash flow problems stop being a rough patch and become structural. If shortfalls are persistent rather than seasonal, if debt is growing quarter on quarter, or if creditors are becoming genuinely difficult to manage, that is the moment to get proper advice, not six months later when the options have narrowed.

Early advice is not an admission of defeat. Licensed insolvency practitioners and business advisors can talk you through the full range of options, from refinancing and informal creditor arrangements through to formal procedures, and knowing what is available often takes the fear out of the decision. Specialist resources from sites like insolvency-online.co.uk can be a useful starting point for understanding what those options actually involve before you speak to anyone.

Conclusion

For Devon businesses, particularly those in tourism, hospitality and retail, the combination of seasonality and sustained cost pressures makes financial awareness more important than ever. The good news is that most of the steps that protect a business are unglamorous and achievable: a weekly cash flow update, an honest look at liabilities, chasing what you are owed, and knowing when to ask for help.

None of that requires a crisis. It just requires making it a habit before one arrives.