With the first Christmas merchandise starting to appear in the shops, a North East business insolvency expert is advising regional retailers not to lose sight of their present finances while planning for the festive season to come.
Andrew Haslam, North East chair of insolvency and restructuring trade body R3, was speaking in advance of the latest Quarter Day on which commercial rental payments are traditionally due, a point in the financial year which has previously seen many well-known retailers struggle with long-term financial pressures.
Haslam, who is also head of specialist business advisory firm FRP Advisory LLP’s Newcastle office, said: “The final quarter of the year is always the most important for retailers as they look to cash in on Christmas and build up reserves for the quieter new year period if they can, but without maintaining a clear picture of where their finances are before the start of Q4, North East retailers could run the risk of not even getting there.
“The financial outlay associated with Quarter Day can have a big impact on retailers’ operations, especially those with multiple locations, and we’ve seen many cases in the last decade where this has been a crucial moment in their business’s life.”
Recent research by R3 found more than two-fifths (42%) of the over 3,600 active retail businesses across the North East with a bricks-and-mortar presence were facing a raised risk of getting into financial difficulty in the next year.
The picture is a little rosier for the North East’s retailers who operate from market stalls, whose level of elevated insolvency risk is 35%, and for online retailers in the region, at 39%.
The proportion of all retail companies in the North East at higher than usual risk of insolvency rose from 25% in January 2017 to 40% at the end of 2018, although it stabilised to a degree in the first half of this year.
R3’s data follows on from recent research by PwC and the Local Data Company which found that a net 1,234 stores had shut on Britain’s top 500 high streets in the first half of 2019, with the North East losing a total of 38 chain stores in that period.
Andrew Haslam continued: “Those who own or manage businesses need to maintain a strong grip on their financial figures, so they can take swift action if they see any potential problems coming their way – the earlier they engage with their creditors, the better the outcomes can be for all concerned.
“Asking for and then acting on advice from a qualified, regulated restructuring specialist will increase the chances of the business not only surviving, but prospering, and will also mitigate the potential downsides for directors if the business becomes insolvent in the future.”