The economic challenges facing North East businesses has been reflected in the number of regional firms with overdue invoices on their books rising for the sixth consecutive month.
According to analysis by insolvency and restructuring trade body R3 of new data provided by CreditSafe, 13,503 North East firms had failed to clear 228,939 invoices from their systems last month by the date they were due.
The number of insolvency-related activities in the region, which includes liquidator appointments, administrator appointments and creditors’ meetings, also showed a month-on-month increase, going from 70 in June to 76 in July, and has risen for the third consecutive month.
On the plus side, the R3 data revealed that there were 1,257 new businesses set up in the North East during July, although this is slightly down on June’s figure of 1,305 and represents the second lowest monthly number this year, ahead only of January’s 1,213 start-ups.
R3 North East chair Chris Ferguson, who is head of recovery & insolvency at Gosforth-based RMT Accountants & Business Advisors, is advising company directors who find themselves unable to pay their bills on time to look closely at the reasons why and seek qualified advice if they’re concerned about being able to rectify the situation.
He says: “Being unable to pay your invoices within the agreed terms is one of the key signs of business distress and, of course, the impact of late payments are not isolated to the company itself.
“Late payments directly impact cashflow and onward payments to suppliers, and insolvency practitioners regularly deal with cases where suppliers encounter treading issues through no fault of their own.
“Rising utility bills, soaring raw material costs and problems in the supply chain are among a wide range of issues that are contributing to making trading conditions difficult for businesses in many sectors, especially in areas like hospitality and retail where consumers are clearly cutting back their spending, and there’s no real indication that things are going to get much easier in the short-term.
“Problems paying invoices on time should be a real wake-up call for owners and management teams and should prompt them to take steps to address any trading issues, including seeking qualified advice to help implement measures that will support long-term financial sustainability.
“The sooner advice is sought, the wider the range of options available to find and implement a sustainable turnaround plan.”