• Fri. May 24th, 2024

North East Connected

Hopping Across The North East From Hub To Hub

R3 North East chair Chris FergusonR3 North East chair Chris Ferguson

The number of new businesses set up in the North East in the first half of the year has grown by four per cent on the same period as last year – but the number of insolvency events in the region has grown by 16 per cent.

According to analysis by insolvency and restructuring trade body R3 of new data provided by CreditSafe, 4,164 new businesses were established in the North East between the start of April and the end of June, taking the total for the first half of the year up to 8,656.

The Q2 figure is marginally higher than the 4,135 new businesses set up in the region during the second quarter of last year, while there were 334 more North East start-ups founded in the first half of this year than over the same six months in 2022 (8,322).

R3’s research also found that there were 264 insolvency-related activities, which includes liquidator appointments, administrator appointments and creditors’ meetings, across the North East during the second quarter of the year, which followed on from 249 in the preceding three months.

The 513 insolvency-related activities so far this year compare to just 442 in the first half of 2022, while the total for this year’s second quarter (264) is fifty per cent higher than for Q2 last year (176).

Almost 12,300 North East businesses were holding over 150,000 overdue invoices on their books during June that should already have been settled, with both figures being broadly comparable with the numbers for the preceding month.

Chris Ferguson, North East chair of R3, who is head of recovery & insolvency at Gosforth-based RMT Accountants & Business Advisors, says: “While it’s always encouraging to see an increase in the number of new North East businesses, the economic climate remains challenging.

“Last month’s official figures showed the highest monthly number of corporate insolvencies for England and Wales since the beginning of 2019, while the number of firms put into liquidation by their directors last month through Creditors’ Voluntary Liquidations was more than twice as high as it was in May 2019.

“Late payment problems remain a consistent theme for many North East firms, and delayed payments can very often be a major contributory factor to the failure of many otherwise-viable businesses.   So withholding payments to suppliers clearly has a far wider impact than just on a distressed business itself.

“With inflation remaining high, interest rates continuing to rise and the inevitability of increased winter energy costs not very far away, it will not be an easy ride for businesses to navigate the difficult economic situation that we’re all experiencing at the moment.

“The second half of the year is likely to be just as challenging as the first, which makes it even more important for business owners to have good visibility of financial and management information, so they can react as soon as they begin to see any potential problems arising.

“Talking about your financial concerns isn’t easy, but the earlier business owners seek qualified advice, the more options they will have for putting things right.”