North East a hotbed for insolvency cases
The North East was the only region to record a rise in the rate of corporate insolvency in the past year, according to new figures from the Insolvency Service.
The insolvency rate for the region has jumped to 123 insolvencies per 10,000 businesses, while all other regions saw a decrease in risk levels.
That figure is up from 114 per 10,000 the year before, and compares unfavourably with the rate for all of England and Wales, which stands at 81 per 10,000 companies.
Only the Yorkshire and Humber region has a higher rate of insolvency (129 per 10,000 businesses), but that figure has fallen from 141 a year ago.
On the back of the figures, insolvency and restructuring trade body R3 have warned businesses to carefully manage their finances.
Some 14,210 insolvencies took place across England and Wales in 2017, a figure that is broadly similar to that seen in the two years previously.
Those firms employed in the region of 187,000 people and had a combined turnover of around £23.4 billion.
The greatest rate of insolvency was seen around businesses that were between four and nine years old, and which either employed 20 to 49 people or had a turnover of £0.5 million to £1 million.
R3’s North East chair, Andrew Haslam, said the region also has highest rate of personal insolvency, highlighting that there are a number of financial issues in the North East.
Expanding companies can be hit with numerous hurdles to overcome, especially if they move premises or if a new product fails to have a significant market impact.
Back office procedures can also be left behind if a business experiences rapid growth, which can limit, slow or even derail the potential for further growth.
Access to finance can also be an issue, although an array of alternative finance options are available to support businesses in need of assistance.
The key for any business facing financial difficulties, or for a director who is unsure of the next move, is to seek advice at the earliest opportunity.
Not only can this help to highlight potential problems in the future, but it also increases the number of potential restructuring solutions that are available if an issue is found.
By Phil Smith
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