A rise in the number of companies going bust in the UK proved good news for insolvency expert Begbies Traynor in recent months as it started hiring more staff to keep on top of what it thinks will be a growing trend.

The company warned that its insolvency division will continue to get more business in the months to follow – good news for the business, but bad news for thousands of small firms across the country.

Begbies said the number of businesses going insolvent in the UK increased by a little over 17% to 24,326 in the year to the end of September.

Most of these companies were small firms that went into liquidation, but the number of administrations, which tend to involve larger companies, also increased to close to pre-pandemic levels.

The increase meant that revenue at its insolvency division grew by 17% to £35 million. Group-wide revenue rose 13% to £66 million.

That helped the company grow revenue by 12.6% to £65.9 million in the six months to the end of October.

Begbies said it now anticipates “continued increase in insolvency activity” and has expanded its team to deal with the new business.

“We anticipate that activity levels in our largest service line of insolvency will continue to increase in tandem with the indicators of corporate financial stress in the UK, resulting from the current interest rate and inflation environment,” it said in an update to shareholders on Monday.

“This gives the board confidence that the insolvency team will continue to deliver growth through the second half of the current year and thereafter.”

The company said that, as a result of increased demand, it has invested more in its team. The number of full-time equivalent jobs rose 12% over the last year on its fee-earning insolvency team.

Overall the business now employs 1,051 people, an increase of 93 from a year ago.

“As a result of the continuing increase in demand we have continued to invest in growing our team … ensuring we retain the headroom to handle a further increase in activity levels,” Begbies said.