Northern businesses optimistic despite widespread distress signals
Firms across the North East remain optimistic for 2018, despite a rising number of them showing signs of business distress.
Research from insolvency and restructuring trade body R3 and BDRC shows that 27% of firms in the North East, Yorkshire and Humberside are exhibiting at least one sign of distress, up from 14% in April.
Meanwhile the proportion of businesses reporting growth fell to 45% in September, down from 68% six months previously.
Despite these warning signs of business distress, optimism remains as 24% of firms expect growth in 2018, with 72% predicting a degree of stability.
Around 27% of firms in the North East region told R3 that they had seen profits rise and 25% revealed they have expanded their areas of operation and increased staff numbers.
A wide range of business distress signals were monitored in the research, with late payments being the most common issue – 16% of firms said they had outstanding invoices that were 30 days past their due date.
Some 14% of firms listed decreasing sales volumes as a cause for concern, while 13% said they regularly hitting their maximum overdraft.
A further concern, listed by 6% of businesses, was decreasing market share, with all of the factors capable of impacting on company finances.
R3’s North East chair Neil Harrold, reports that a rising number of firms are making enquiries with corporate insolvency practitioners in the region in order to get advice on what to do should their situations worsen.
He points to a jump in fixed costs being a major point of concern, as business rates, the National Minimum Wage, and inflation, have all increased this year.
Economic growth has not, in many cases, offset the rising outlays, meaning firms are in a weaker financial position.
Firms in financial distress should seek advice from corporate insolvency practitioners, as they can help company directors to make decisions that are in the best interests of their businesses.
By acting quickly, the number of available options increases considerably.
By Phil Smith