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Signs Of Both Distress And Growth For Majority Of Regional Firms

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Signs Of Both Distress And Growth For Majority Of Regional Firms

The majority of regional companies are reporting experiencing at least one sign of business distress, as well as at least one sign of growth, painting a mixed picture for the region’s business community.

New research by insolvency and restructuring trade body R3 indicates that the proportion of companies across the North East, North West, Yorkshire and Humberside reporting at least one of the five signs of business distress is nearly six in every ten (58%).

But in better news, the proportion of such firms saying they are experiencing one or more signs of business growth is over seven in ten (72%).

The most common sign of business distress among regional firms is late payment of invoices, with more than a quarter (27%) of firms saying they were owed payment on invoices that were 30 days past their due date.

Having to make redundancies (14%) was the next most common sign of business distress, followed by decreasing sales volumes (13%), decreasing profits (12%) and firms regularly using their maximum overdraft (11%).

On the upside, a quarter (25%) of the firms in the North East, North West, Yorkshire and Humberside said they were investing in new equipment, while only slightly fewer were seeing their market share grow (24%).

More than a fifth (22%) of regional firms are seeing an increase in sales volumes, while the same proportion said they had seen profit levels increase.

Andrew Haslam, chair of R3 in the North East and head of specialist business advisory firm FRP Advisory LLP’s Newcastle office, says: “The mixed messages in our latest report very much reflect the mixed fortunes that different parts of the regional economy have been experiencing this year, and there doesn’t appear to be very much more clarity or definition coming in the foreseeable future.

“Previous R3 research has suggested that the regional hospitality industries are performing robustly, a position that was reinforced by the recent hot weather and England’s performance at the World Cup. By way of contrast, our professional services, and manufacturing sectors haven’t been having such a good time.

“The insolvency practitioners and business advisory experts among R3 North East’s membership have been reporting a rise in the volume of enquiries they have been receiving recently, with much of their work focusing on providing advice and guidance that enables struggling businesses to improve their fortunes without necessarily entering a formal insolvency procedure.

“Companies experiencing signs of business distress have a wide range of possible solutions that can help to address them, with the regulated advisors within the insolvency and restructuring profession on hand to assist directors to make the best choices for all parties involved.

“Taking prompt action remains as crucial as ever, and the sooner owner/managers look for expert advice on what they can do to resolve their problems, the more options they will have for finding the best possible outcome.”