• Sat. Dec 14th, 2024

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Neil Harrold, North East chair of insolvency trade body R3 and a partner with Hay & Kilner SolicitorsLate payment of invoices is still causing problems for a substantial proportion of regional businesses, according to the results of new research by insolvency trade body R3.

R3’s latest Business Distress Index (BDI), which reports regularly on the levels of growth and distress of companies across the UK, found that more than one in six (18%) of the firms surveyed in the North East, Yorkshire and Humberside said they were owed money on invoices that are more than 30 days past their original due date.

Overall, the survey showed that 16% of regional businesses are currently suffering one or more of the five key indicators of distress that R3 measures through the Business Distress Index, compared to 22% of them last April.

But on the flipside, just over half (51%) of regional businesses firms are showing at least one of the five key growth indicators covered in the BDI, compared to 58% in April 2015.

Well over twice as many regional business owners feel more positive (55%) about the economy generally than they did three months ago than feel more negative (20%) about its prospects.

And an overwhelming 97% of firms across the region expect business activity to increase (43%) or at least stay the same (54%) over the next year.

Neil Harrold, North East chair of insolvency trade body R3 and a partner with Hay & Kilner Solicitors, says: “Problems relating to late invoice payment are very persistent, and put unnecessary strain on business finances.  If payment terms are agreed with suppliers, then customers have no legitimate reason not stick to them, let alone still not having paid what they owe thirty days after the initial deadline.

“Delayed payments can create unnecessary pressures on cash flow for growing businesses, and can stymie or even stop altogether the development of companies that might otherwise be creating and sustaining regional wealth and employment.

“While many more businesses are growing than are showing signs of distress and almost all the individual signs of distress remain at very low levels, it could be that greater numbers of regional firms start to see at least one of these warning lights beginning to flash in the months ahead and it’s sensible to be prepared for that happening.

“The UK has moved into a new phase of the economic cycle. The widespread rapid growth associated with recovery and the boost provided by low inflation and low fuel costs last year are really falling away now, and headwinds, such as uncertainty over the EU referendum, stock market worries, or incoming compliance and reporting changes, are also starting to pick up.

“If any businesses do start to run into trouble, the best thing owner/managers can do is take proactive steps and professional advice on how they can address their problems and find the best route back towards calmer financial waters.”

By admin