Nearly 1,400 businesses were started in the North East during January - the highest number in six months.
Data from Creditsafe analysed by insolvency and restructuring trade body R3 shows 1,396 companies were started last month, which is 15% up on the same period in 2022. And the number of insolvency related activities during the month - including liquidator and administrator appointments and creditors' meetings - were 16% higher year-on-year at 59.
Not included in that data are the two high profile administrations of construction contractors Tolent and Metnor, both of which occurred this month. Meanwhile R3's findings also show North East businesses had more than 157,875 invoices on their books without money received during January. Almost 12,300 regional firms had outstanding invoices beyond their payment deadlines that should have been settled.
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North East chair of R3 Chris Ferguson, who is head of recovery and insolvency at Gosforth-based RMT Accountants & Business Advisors, said: "The start of a new year can often be a catalyst for people to draw a line under the past and start a new business, whether they’re a first-time founder or an experienced entrepreneur.
"It’s encouraging to see this trend continuing, and especially to see a double-digit percentage rise in the number of new start-ups last month compared to January last year, but it shouldn’t mask the significant
challenges that anyone running their own business will face this year. The 16% year-on-year rise in the number of North East firms experiencing insolvency-related issues reflects the difficult economic situation in which we currently find ourselves, while the substantial number of overdue invoice on regional firms’ books is a real concern.
"Being unable to pay your bills on time is one of the key indicators of business distress, while struggling to get monies owed from customers is often a major contributory factor to the failure of many otherwise-viable businesses. North East business owners and directors should make maintaining full and close oversight of their businesses’ financial position a real priority for 2023, especially in terms of their cashflow and creditors, and they need to be ready to act on any financial concerns that they see arising.
"Insolvency practitioners can help struggling companies begin to put things right, often without the need for a formal insolvency process, and the earlier that action is taken, the better the chance there is of a suitable solution being found."
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