North East firms voice survival concerns
One in five businesses in the North East has immediate concerns for its future, according to new research.
According to the Business Barometer from Hitachi Capital, it means the region has the highest proportion of firms fearing they will go bust in the UK.
The situation has worsened rapidly across the last three months too, as the proportion of firms dreading insolvency rose from 3% to 20% in that period.
This was significantly ahead of the next highest figure, as 14% of firms in Wales and 13% of those in London admit to having concerns over their ability to keep trading.
The Barometer also reveals a change in business confidence, as political and economic uncertainty has impacted negatively on small business operations.
Firms have voiced concerns over new job possibilities, their ability to influence headcount and over the potential to enter into new markets.
Businesses are focused on their finances and cash flows, are tackling late payments more than before, and are looking at alternative finance options, but they need to act quickly.
Figures from insolvency and restructuring trade body R3 suggest that the vast majority of firms are displaying at least one sign of business distress.
More than one in four firms said they were owed money for unpaid invoices, with late payments having a particularly negative impact on cash flow.
Redundancies and reduced sales were deemed other fundamental signs of business distress, while firms in the hospitality and retail sectors were most concerned with their ability to keep trading.
This follows the announcement in August from the Centre for Retail Research which suggested that as many as 10,000 retail stores could shut before the end of the year.
The key for businesses facing financial issues is to act quickly – seeking professional advice can outline the potential recovery and restructuring options that are available.
Generally speaking, the range of options will be greater if the issues that need to be overcome are identified sooner rather than later.
By Phil Smith