Guidance on where the owners of North East businesses with financial problems should be looking for sound financial advice is being launched by the regional branch of insolvency trade body R3.
The new guide has been published by R3 North East in response to reports of increasing numbers of unregulated or unlicensed advisors targeting financially distressed firms by claiming to be able to eliminate all financial worries and help people avoid their legal duties.
It covers a wide range of different topics, including what corporate insolvency entails in practice, what sort of advice and options are available for companies potentially facing it and how the insolvency practitioners that manage these processes actually operate.
Research carried out last month found that, while the number of UK corporate insolvencies is falling, around one in three (33%) regional businesses were still suffering one or more of the five key indicators of distress that R3 measures through its regular Business Distress Index.
Further data released by R3 last month also showed that four of the North East’s key industry sectors – construction, manufacturing, professional services and agriculture – were above the national average for the proportion of firms with a heightened risk of entering insolvency in the next year.
R3 North East chair Neil Harrold, who is also a partner with Hay & Kilner Solicitors in Newcastle, is advising regional company owners and management teams to ensure they only seek advice from a qualified, regulated source if they start to think their firms’ finances are becoming too challenging – or risk the possible consequences.
He says: “When financial problems are mounting for any business, turning for help to people or companies who’re offering a seemingly easy way out can clearly be tempting, but following incorrect or incomplete advice from unlicensed advisers can easily lead to even greater problems arising.
“There is a real risk that going down this road often puts a business in a worse financial situation, or could even, however unwittingly, cause the owners and managers to be breaking the law.
“Our free guide is designed to clearly show the different options management teams have when trying to face up to their money worries, what the different types of corporate insolvency measures actually entail, and how to identify the right qualified source for helping you to turn your finances around.
“The best course of action for any company owners who feels their business debts are becoming too great a problem is always to seek professional advice as early as possible, rather than hoping the issue will just go away, so they have the widest possible range of solutions for getting things back on track.”
The report ‘Unregulated Adviser Guidance for Businesses’ can be found on the www.r3.org.uk website