More than 2,600 new businesses were set up in the North East in the first two months of the year, but the number of insolvency-related activities in the region also jumped by almost half between January and February.
According to analysis by insolvency and restructuring trade body R3 of new data provided by CreditSafe, there were 1,213 new businesses set up in the North East in January this year, with a further 1,402 established in the following month.
However, 51 insolvency-related activities, which includes liquidator appointments, administrator appointments and creditors’ meetings, took place in the North East in January, by with the figure jumping to 74 in the following month.
R3’s analysis of the CreditSafe data also showed significant issues persisting in the region around late payment of invoices, both from the number of regional firms that are owed money and the number that aren’t able to pay their bills on time, which is one of the key indicators of business distress.
In February, North East firms had a total of almost 670,000 invoices on their books that had gone past their payment deadline without being settled, while in the same month, more than 38,000 regional businesses had overdue bills.
R3’s North East chair Chris Ferguson is now urging any regional firms that are concerned about the impact of bad debt on their future prospects, or find they’re unable to meet their bills on time to seek qualified advice as soon as possible about how their problems might be resolved.
Chris Ferguson, who is head of recovery & insolvency at Gosforth-based RMT Accountants & Business Advisors, says: “Despite all the economic headwinds that we’ve faced over the last two years, and that are continuing to impact the regional economy, it’s encouraging to see that the North East’s appetite for entrepreneurship remains undiminished.
“But even with these encouraging start-up numbers in mind, there are obviously a great many issues facing us all, and it’s sadly unsurprising that we’re seeing quite widespread signs of business distress within North East firms.
“Despite some progress being made in recent years, late payment of invoices remains a perennial problem and puts unnecessary strain on the finances of businesses that can stop them investing in new services, taking on new commercial opportunities, or even having enough cash in the bank to cover their day-to-day costs.
“Experiencing an insolvency-related issue is by no means the end of the story for struggling firms, and insolvency practitioners have a wide range of tools that they can bring to bear to help companies get things back on track.
“The key to a successful outcome is to seek support from a qualified advisor as soon as potential problems become apparent, rather than waiting and hoping that these problems will resolve themselves. This should ultimately maximise the restructuring options available for struggling businesses.”