North East business owners need to keep a close eye on their festive finances if they’re looking to catch up on a tough trading year in the run up to Christmas.
That’s the advice of Alexandra Withers, North East chair of insolvency and restructuring trade body R3, after the latest official figures showed another substantial year-on-year increase in the number of business insolvencies across England and Wales.
The Insolvency Service statistics show that there was also a 63.6% year-on-year increase from the 864 cases of corporate insolvency registered in October last year up to the 1,405 cases lodged last month.
Despite the annual increase, the October figure represents a three per cent month-on-month fall from the 1,446 cases of corporate insolvencies reported in September.
Alexandra Withers, who is an associate solicitor in the insolvency department of Short Richardson & Forth Solicitors in Newcastle, is now advising North East business owners to be especially mindful of the signs of potential business distress in the coming weeks, which could include cashflow problems and difficulties paying invoices and staff on time.
She says: “The run up to Christmas is often the busiest and best trading period of the year for operators in many different sectors, and with industries like hospitality, leisure and retail having been especially badly hit this year by pandemic restrictions, the race will be on to make up as much commercial ground as possible during the festive season.
“In trying to make this happen, it can be easy for business owners to lose sight of the state of their companies’ day-to-day finances when keeping a strong grip on them is actually more important than ever.
“Issues like cashflow problems and an inability to pay supplier invoices on time could indicate deeper financial issues within a business that could threaten its future sustainability – after all, if your suppliers lose patience with this sort of late payment and the impact it’s having on their own operations, you could easily find yourself without anything to sell.
“The wider economic picture shows that the business climate is still harsh. Growth is slowing, costs are rising, and consumer confidence is falling, and while consumer spending is higher than this time last year, rising Covid case numbers and sharp energy price rises mean that many businesses aren’t seeing the benefits of this.
“Anyone who is concerned about their business finances should seek advice as soon as possible, so that they have the maximum number of potential options available to address their problems and enough time to make a decision about what the best one for them to take would be.”
“Most insolvency professionals will also give you an hour of their time for free to explain your situation and outline and discuss your potential options.”