Over the last two months, the number of new businesses created in Yorkshire and Humberside has declined as the economic climate has deteriorated, along with falling confidence as the likelihood of recession has increased.
According to analysis by insolvency and restructuring trade body R3 of new data provided by CreditSafe, in March 2022, the region saw the highest number of start-ups this year with more than 5,600 new enterprises. However, since May, confidence has declined amid continued pessimistic economic forecasts and in July, it fell to 4,383 new businesses – the lowest figure so far in 2022 and a decrease of 18% since the start of the year.
R3’s analysis of the CreditSafe data also showed the worsening picture being reflected by growing issues around late payment of invoices in Yorkshire, one of the key indicators of business distress.
Over the last four months, the number of companies in the region that owe money having been unable to meet payments on time has been creeping up, from 51,108 in April to reach more than 51,700 in July.
Last month, Yorkshire businesses had a total of over 785,600 invoices on their books that had gone past their payment deadline without being settled, with an average invoice value of more than £10,600.
However, there has been a slight fall in the number of insolvency-related activities in the region in July. Last month, 240 insolvency-related activities, which includes liquidator appointments, administrator appointments and creditors’ meetings, took place in Yorkshire, down from 257 in June representing a 7% fall.
Eleanor Temple, chair of R3 in Yorkshire and a barrister at Kings Chambers in Leeds, comments: “Given the wide range of challenges businesses are currently facing, it is worrying to see indicators of financial distress already starting to escalate in Yorkshire and across much of the UK. Not only has there been a fall-off in the region’s entrepreneurial activity in the last few months, but we’re also seeing the perennial problem of late payment of invoices growing, putting additional strain on suppliers’ own businesses.
“We urge any regional firms that are concerned about the impact of bad debt on their future prospects, or are struggling to meet their bills on time, to seek professional advice as soon as possible to find out how their problems might be resolved.
“The key to a successful outcome is to seek support from a qualified adviser as soon as potential problems arise – do not be tempted to wait in the hope that these problems will go away on their own. Early expert advice should ultimately maximise the restructuring options available for businesses experiencing financial distress.”