More than 19,500 new businesses were set up in the North West in the first three months of the year – the highest number in any region in the UK except for London and East Anglia.
Research by the insolvency and restructuring trade body R3 shows the number of start-ups has risen steadily in each of the three months. However it also reveals a sharp rise in insolvency-related activities and continued problems with late payments – both in terms of companies that are owed money and those unable to pay their bills on time.
R3’s research, which is based on information provided by Creditsafe, shows that in January there were 224 insolvency-related activities, which include the appointment of liquidators or administrators and creditors’ meetings. The number jumped to 308 in February and 815 the following month.
In March, North West firms had a total of over 748,600 unpaid invoices on their books that had gone past the payment deadline, while in the same month, almost 59,000 businesses in the region had overdue bills – a key sign of business distress.
R3’s North West chair Allan Cadman says: “After one of the most tumultuous economic periods in living memory with the pandemic causing huge disruption for businesses, it is reassuring to see that the entrepreneurial spirit is alive and well in the North West. However the first few years of trading are often the most risky and rigorous financial forecasting and adequate funding are vital.
“While the number of start-ups is encouraging, we are also seeing widespread signs of business distress. Late payment is a perennial problem and puts unnecessary strain on a business’s finances, stopping them investing in new services, taking on new opportunities or even having enough cash in the bank to cover day-to-day costs.”
Allan, who is also a partner at insolvency firm Poppleton & Appleby, is urging new and existing firms that are concerned about their finances or unable to pay their bills on time to seek qualified advice as soon as possible.
He adds: “The key to a successful outcome is to seek support from a qualified advisor as soon as potential problems become apparent, rather than waiting and hoping that these problems will resolve themselves. This will maximise the restructuring options available for any business that is struggling.”