Back-to-back months of falling numbers of East Midlands companies with late payments, as well as a drop in insolvency-related activity in the region, should not lull business owners into a false sense of security.
This is according to the Midlands branch of R3, the UK’s insolvency and restructuring trade body, and follows an analysis of data from business intelligence provider Creditsafe.
The statistics indicate that the monthly total of East Midlands businesses with late payments has fallen consistently since the 2023 high in February but, despite the drops, the figures remain high, with June registering 23,551 local companies with overdue customer invoices.
While there have been monthly fluctuations throughout 2023 in the region’s insolvency-related activity – which includes liquidator and administrator appointments as well as creditors’ meetings – the figures show a fall of 15% in the East Midlands between May and June and of 32% since the end of the first quarter of 2023 in March.
R3 Midlands chair Stephen Rome said: “These statistics may be somewhat encouraging for local companies, but we have to be realistic and stay focused on the fact that we are continuing to operate in a very testing economic environment.
“We have the significant economic hurdles of higher inflation and an increase in the cost of finance to overcome, as well as a sizeable squeeze on consumer spend. These enormous challenges will not be going away anytime soon.
“Furthermore, overall corporate insolvency levels are above those reached before the pandemic, and Creditors’ Voluntary Liquidations are persistently high, meaning that many local business owners have felt they have had no option but to close down operations before the decision was taken away from them.
“Key advice for all company directors and sole traders, therefore, is that if significant cash flow difficulties arise, it’s crucial to ask for professional support as soon as possible. There is a significant amount which can be done to rescue a business, beyond traditional insolvency solutions, if help is taken early enough.”
