UK ZOMBIE COMPANIES
The tradingdead.
Inside the UK’s zombie companies
An active company record tells only part of the story. Explore the businesses whose finances have stood still, and what their payment behaviour reveals.
Explore the findings ↓Around
1 in 25companies in our UK dataset meets our zombie definition.
02 / THE DEFINITION WHAT IS A ZOMBIE?
Actively trading?
Check for a pulse.
From the outside, everything looks alive. But beneath the surface, they’re one negative event away from collapse.
A zombie company is a business that’s still operating but is financially fragile, surviving from month to month with very little room to absorb a downturn. It could be a local builder, your regular supplier, a small manufacturer… and you may have been working with them for years. You could currently be trading with one without even realising it; and the more businesses you work with, the more likely it is.
To find them, we looked for a frozen balance sheet: working capital and shareholders’ funds unchanged across the last three filed years. We also included companies in steady financial decline or with a habit of paying late, counting each company only once.
Explore the three qualifying criteria
- A · Frozen financesWorking capital and shareholders’ funds are both exactly unchanged across the last three filed financial years.
- B · Sustained financial declineLosses in each of the last three filed financial years, with debt unchanged or rising each year, falling cash and shrinking net worth. All four conditions must be met.
- C · Late-payment behaviourAt least one recorded late payment and no recorded on-time payments in the trade-payment data.
Meeting any one of A, B or C qualifies a company. This classification does not, by itself, establish insolvency or prove that a company has stopped trading.
1 in 25
Zombie companiesOther active UK companies
A frozen balance sheet is just the starting point. Payment records and court judgments build a fuller picture of the health of a business.
Look beyond the accounts ↓03 / THE COMPARISON LOOK BEYOND THE LABEL
Frozen finances?
Read their vitals.
How do zombie companies really compare with other UK businesses?
We looked at four warning signs: court judgments, how late they pay, how often they pay late, and how many end up insolvent. On every measure, zombie companies come off worse, and often by a long way.
Zombie companies
Other active UK companies
THERE’S MORE TO THE STORY
No single measure tells the whole story of a company’s financial position. Use a company credit report to compare different indicators, while taking the company’s background and industry into account.
04 / THE TAKEAWAY CONNECT THE DOTS
A company credit report.
Separate the living from the undead.
A frozen balance sheet is only one symptom. A company credit report shows you the full picture, so you can spot the walking dead before they drag you down with them.
Check for a pulse →Longer payment delays.
A higher recorded insolvency rate.
These comparisons describe groups of companies. They do not predict the outcome for an individual business.
05 / UK VS US A GLOBAL OUTBREAK
An outbreak on
both sides of the pond.
We looked at US businesses to find out whether the same warning signs appear on the other side of the Atlantic, and if the same steps should be taken to mitigate risk.
Zombie companies exist globally, but our research found they're more common in the US than the UK. Around 1 in 16 US businesses are zombies, compared with 1 in 25 in the UK. Despite there being more zombies in the US, there is still a sizeable risk for UK businesses.
In both markets, lower turnover is linked to a higher zombie rate. In the UK, 11% of businesses turning over £250k or less are zombies, compared with 6% of US businesses earning below $500k.
Business size shows a similar pattern, but it is much stronger in the US. 3.46% of UK businesses with 1–9 employees are zombies, compared with 5.54% of US businesses with 1–4 employees.
But the biggest similarity is how easily the risk can hide in plain sight. In the US, 94% of registered zombies are still officially Active, making it more likely you’ll trade with one.
See the full report for US zombie companies →| Measure | UK | US |
|---|---|---|
| Overall zombie rate | 4.0%, or 1 in 25 businesses | 6.4%, or 1 in 16 businesses |
| Low turnover = more zombies | 11.0% zombie rate for turnover of £0–£250k | 6.0% zombie rate for revenue under $500k |
| Small businesses are more likely to be zombies | 3.46% among businesses with 1–9 employees | 5.54% among businesses with 1–4 employees |
WHAT DOES THIS MEAN?
A single indicator can’t tell you whether a company is a zombie. Looking at longer-term financial and payment behaviour to identify trends, rather than relying on the most recent data, can reveal the real risks.
Want to check an international company for signs of life? Creditsafe gives you access to more than 430 million business reports across 200 countries.
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