British businesses finished the last fiscal year stronger than they started it, according to the latest Business Insolvency Index from Experian.

The average financial strength score, an indication of how likely a firm is to fail in the next 12 months, improved from 80.99 going into April 2010 to 81.58 by the end of March 2011. The biggest increase came from mid-sized companies, those with between 100 and 500 employees. The average score for this segment of the business population rose from 81.18 to 82.81.

During the last fiscal year, the average annual financial strength score was 81.14 – an improvement on FY09/10 when it was 80.83.

In March 2011, the monthly insolvency rate was 0.11% – the same as that recorded in March 2010. Companies with 11-25 employees continued to have the highest insolvency rates, while the North East and Yorkshire also continued to record the highest rates of insolvency.

The North East region saw the biggest increase in its insolvency rate – from 0.17% in March 2010 to 0.22% in March making it the worst performing region of the UK. The South East and South West had the lowest rate of insolvency with only 0.08% of the business population failing in March 2011.

Although businesses in Greater London saw the biggest increase in financial strength score from 79.76 in March 2010 to 80.65 this year, it remained the region with the lowest score.

Businesses with 100-500 employees saw the highest annual increase in their insolvency rate, albeit marginal from 0.16% to 0.18%. Businesses with 11-25 employees had the highest rate of insolvencies in March with 0.26% closely followed by companies with 26-50 employees at 0.23%.

When looking at the fiscal year as a whole, the insolvency rate fell to 1% from 1.20% for FY09/10.

Max Firth, managing director of Experian pH, said: “While signs of improvement in the average financial strength score of British businesses are encouraging