The Electrical Contractors’ Insurance Company (ECIC) has noticed that the number of business failures has reduced, after looking at the number of policy lapses in the electrical contracting sector. Data from the ECIC over the period of July 2013 – July 2014, shows that the number of electrical contractors to cease trading has fallen 25% from the same period starting July 2012.

Looking at just the past years trading, in the six months following February the number of electrical contractors to cease trading has dropped 91% from the previous six months. Despite these positive figures, the first stage of economic recovery can be tougher to negotiate than recessionary times. As work increases, materials and labour have to be financed after cash reserves will have been hit hard. This influx of work can generally push insurance premiums, adding further pressure to cash flow.

“The fall in business failures is a very welcome sign of an improving outlook for the electrical sector, but now is the time to be very cautious with cash flow. Electrical contractors are often responsible for large upfront costs for equipment as well as manpower. It is therefore really important that they are on top of their cash flow, particularly as they will often have to chase customer payments invoices at the end of each month. By spreading their insurance premium over monthly payments, electricians can manage their cash flow more effectively which helps ride out the recovery, ensuring the downward trend we are seeing in business failures continues.’

- Phil Scarrett, Sales and Marketing Director of ECIC.