Businesses urged to keep closer eye on finances
Businesses in Sunderland are being warned to act quickly at the first sign of financial trouble.
The warning comes after new Insolvency Service statistics show that last year UK company insolvencies rose to their highest level since 2013.
Sunderland has been no stranger to business troubles, with a number of names with a local presence - such as fashion chain Select - entering administration.
Andrew Haslam, a partner in specialist business advisory firm FRP, says that, over the past year, firms have faced a range of pressures and an increase in debtor days - the amount of time it takes for payments to be settled.
This, he says, has impacted their ability to weather difficult trading conditions.
He says an ongoing ‘brain drain’ of local talent has restricted access to skilled workers, while those in the licensed trade have been particularly impacted by rising business rates.
He said: “2020’s challenges remain unknown, particularly given uncertainty around our post-Brexit environment.
“In Sunderland, many businesses will be particularly monitoring developments around the future of the Nissan plant.
“What is certain is that local firms will be working hard to make the most of new opportunities.
“But with our data showing that just over a fifth of the city’s firms are showing signs of distress, it’s important that companies keep a close eye on their operations to ensure they’re in a strong position for whatever lies ahead.”
He added: "Where business owners identify cracks in their operations, they should seek expert advice at the earliest opportunity.
“Quick action will maximise the amount of time to find an effective solution.
“In our experience, creditors are more likely to restructure debt at the early signs of trouble, rather than risk the entirety of their investment.”
He said there had also been a recent rise in local business owners exploring options to wind-up their business while they are still solvent.
Anyone considering this should, he says, seek advice on the potential reduction in Entrepreneurs’ Relief.