Across the North, signs of business distress rose by six per cent between April and November 2018, while indicators of commercial growth have remained virtually static.
The latest research by insolvency and restructuring trade body R3 shows that almost two-thirds (64%) of companies across the Yorkshire and Humberside, the North West and the North East are now experiencing at least one of six key signs of business distress, compared to 58% last spring.
At the same time, levels of Northern firms saying they are experiencing one or more signs of business growth has remained almost unchanged at 73% (72% in April 2018).
The most common sign of business distress among companies in the North is late payment of invoices, although the proportion now saying they are owed payment on invoices over 30 days past their due date fell from 27% to 22% over the period.
A reduction in sales volumes and decreasing profits (both 18%) were the next most common signs of business distress; followed by having to make redundancies and regularly maxing out the business’s overdraft (both 12%); and a recent fall in market share (9%).
On the upside, three in ten (30%) of the companies surveyed across the North said they were seeing an increase in sales volumes, while a quarter (24%) said they had seen profit levels increase recently.
A fifth (21%) of the region’s firms are investing in new equipment, while 15% reported seeing their market share grow and the same proportion is expanding either geographically into new markets or by recruiting.
Eleanor Temple, chair of R3 in Yorkshire and a barrister at Kings Chambers in Leeds, says: “Despite some signs of resilience among companies in the North, our latest research also reveals troubling indications of rising business distress here.
“With continuing uncertainties around Brexit added to the mix, businesses are facing some tough challenges and this picture looks set to continue for the foreseeable future.”
Ms Temple continues: “While much work has gone into tackling late payment practices in recent years at both a regional and national level, this remains a key contributory factor in many financial problems faced by businesses. In Yorkshire and Humberside, it remains the most prevalent sign of distress with over a quarter of businesses in the region saying they are owed payments of 30 days or more.
“Unfortunately, these indicators of business distress can very quickly spiral into problems which threaten a company’s future. It’s vital that business owners enlist the help of qualified professionals at the first signs of trouble when a wide range of solutions will be available to steer the business back on track.”