Summer weather boosts North East firms
Insolvency risk levels for the North East’s leisure firms have dropped thanks to the weather and the World Cup, new data shows.
Figures from insolvency and restructuring trade body R3 show that fewer firms are deemed to be at above average risk of insolvency for the coming 12 months in the region’s restaurant, pub and hotel sectors.
Both the pub and hotel industries are the best performing in the UK, and have the lowest levels of companies deemed to be at higher risk of insolvency.
The hotel sector in the North East is also performing strongly, as only one other region in the UK has a lower number of firms deemed to be at high risk.
The figures from R3 also reveal that the region’s retail sector is showing signs of improvement, as the insolvency risk level has increased at a far slower rate than at any other point this year.
R3 monitors 11 key industries as part of its business stability studies, and eight of those in the North East are either better, or match, the national averages for those sectors.
Using figures from Bureau van Dijk’s Fame database, levels of risk are calculated based on performance metrics including company balance sheets and the track records of directors that are involved.
Overall, around 40% of businesses in the region are deemed to be at above average risk of insolvency, a marginal improvement on the national average of 41%.
It’s not all positive news though, as 52% of professional services firms in the region are at above average risk, 3% above the sector figure nationally.
R3’s North East chair Andrew Haslam suggested events including the Great Exhibition of the North and the Tall Ships Race have helped to enhance the region’s leisure sector.
He added that while a summer boost is usually seen in the sector, England’s performance in the World Cup has improved the fate of many businesses further.
Despite the positive signs, a rising number of businesses across the UK are finding themselves in difficulty and the key is to act quickly at the first signs of financial distress.
Directors should seek and guidance from insolvency practitioners to discuss potential refinancing or restructuring solutions that could support their businesses in the long term.
By acting quickly, the number of these potential solutions is usually higher.
By Phil Smith