Business leaders in the North East are calling for an end to the country’s “late payment culture” after research found that the number of regional companies in financial distress has soared.
In total 6,394 businesses in the North East were classed as being in ‘significant’ distress during the second quarter of 2017, according to insolvency practitioner Begbies Traynor.
The figures are 14% higher than three months ago and 23% higher than the same period in 2016.
Those in significant financial distress have had minor county court judgements (CCJs) filed against them or have showed evidence of market deterioration.
More troubling is the increased number of firms in “critical” distress, which grew by 29% compared with the second quarter of 2016. Businesses in critical distress are those who have had winding up petitions or CCJs of more than £5,000 taken out against them.
Ted Salmon, North East regional chair of the Federation of Small Businesses, believes increased costs and late payments are to blame for failing businesses.
Mr Salmon said: “With operating costs for small businesses now at their highest in four years, firms are really starting to feel the squeeze.
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