The number of West Midlands companies unable to pay off their debts has seen a slight fall in January.

Some 185 businesses were hit by insolvency in December last year, compared to 140 in January 2012, ,a fall from 0.12 per cent to 0.09 per cent, according to a new report from Experian.

The January rate is slightly higher than the same month a year ago when insolvencies were 0.08 per cent.

The UK rate of insolvencies fell from 0.11 per cent in December 2011 to 0.07 per cent in January this year – the same rate as in January 2011.

Experian said the fall in insolvencies showed that the financial strength of UK firms has improved.

Max Firth, UK managing director for Experian’s Business Information Services division, said: “The fall in the overall rate of insolvencies has taken it back down to the level it was at a year ago, which is certainly positive.

“January generally tends to be a good month, with many businesses benefiting from the Christmas trade.

“When coupled with steady improvements in the underlying financial strength of businesses, it means that we can entertain some cautious optimism for the months ahead.

“The latest data has, however, revealed an increase in the rate of insolvencies for the largest firms.

“This highlights that despite a positive start to 2012, businesses of all sizes still need to understand the risks they are exposed to and have strategies in place to protect themselves.”

The fall in the UK’s insolvency rate was led by businesses with 101 to 500 employees. Failure rates among these mid-sized businesses fell from 0.21 per cent in December to 0.10 per cent in January.

While most business segments experienced comparable insolvency rates to those seen twelve months ago, the insolvency rate of firms with more than 501 employees reached 0.20 per cent in January, up from 0.07 per cent the year before.

The insolvency rate improved marginally among micro businesses with one to two employees and continued to maintain the lowest insolvency rate overall.

Of the five largest industries in the UK – business services, building/construction, property, IT and leisure/hotels - property saw the biggest fall in its insolvency rate from 0.09 per cent in December to 0.04 per cent in January.

It was also the only one of the big five to see a year-on-year fall – from 0.05 per cent in January 2011.