North East entrepreneurs set up almost 4,200 new businesses during the first quarter of the years to help support the regional economy’s Covid recovery.
According to analysis by insolvency and restructuring trade body R3 of new data provided by CreditSafe, there were 4,187 new businesses set up in the North East across January, February and March, with the biggest number (1,572) coming in the final month of the quarter.
And despite the removal of the government’s remaining pandemic business insolvency protections at the end of March, the number of insolvency-related activities in the region actually fell by more than two-thirds between March and April.
While there were 144 insolvency-related activities, which includes liquidator appointments, administrator appointments and creditors’ meetings, across the North East in March, the figure for April was just 44, which is the lowest of any month so far this year.
R3’s analysis of the CreditSafe data also found that North East businesses had more than 218,000 invoices on their books that had gone past their payment deadline without the money being received, while over 13,300 regional firms had invoices outstanding in April that should already have been settled.
North East chair of R3 Chris Ferguson, who is head of recovery & insolvency at Gosforth-based RMT Accountants & Business Advisors, says: “The North East has always been a hotbed of business and industrial ideas, whatever the prevailing economic conditions, and enthusiasm for putting these ideas into practice clearly remains strong.
“The fall in the number of North East firms experiencing insolvency-related issues last month is also encouraging, but it shouldn’t mask the reality that many economic indicators are suggesting there could be recessionary trouble ahead.
“With this in mind, owners and directors should be ensuring they retain full and close oversight of their businesses’ true financial position, especially around their cashflow and creditor position, and should be prepared to take swift action if problems begin to become apparent.
“Being unable to pay your bills on time is one of the key indicators of business distress, while struggling to get the money owed from customers is often a major contributory factor to the failure of many otherwise-viable businesses.
“Insolvency practitioners have a wide range of tools to help struggling companies and, the sooner owners look for support, the more options are generally available to try to put things right.”