The North West has witnessed a significant rise in overdue invoices, reaching a new peak in 2024, according to recent data from R3, the insolvency and restructuring trade body.
The data indicates a worrying trend for Small and Medium-sized Enterprises (SMEs) in the region, who are struggling to stay afloat amid increasing financial pressures.
Increase in Overdue Invoices
The North West experienced its highest number of overdue invoices in 2024, with 583,133 unpaid invoices reported last month, according to R3’s analysis of Creditsafe data.
This marks an increase of nearly 28,000 compared to July 2023’s figure of 555,144, representing a five per cent rise year-on-year.
Financial Pressures on Businesses
Fran Henshaw, Chair of R3 in the North West, highlighted the continuous cost pressures that businesses are facing. She noted the rising costs of rent, raw materials, and wages, which are contributing to the financial strain on SMEs.
Henshaw expressed concern over the potential domino effect, where increasing financial difficulties could push more companies into insolvency.
Potential for Insolvency
Henshaw, who also serves as Head of Corporate Recovery and Insolvency at Beever and Struthers, indicated that if the trend persists, more businesses might seek formal insolvency solutions.
This rise in overdue invoices mirrors the growing debt levels and financial challenges plaguing the region’s businesses.
The North West’s year-on-year increase in companies with overdue invoices was the second largest in the UK, only trailing Scotland.
Comparative Regional Data
The number of companies with overdue invoices in the North West saw a 4.7% increase from 53,905 in July 2023 to 56,418 in July 2024.
In contrast, Scotland experienced an 18.4% rise, making it the region with the highest increase in overdue invoices over the same period.
Impact on SMEs
The surge in overdue invoices adds to the existing burden faced by SMEs in the region. These businesses are already navigating a challenging economic environment.
Financial instability is becoming a common concern, with more SMEs finding it difficult to manage escalating debts and delayed payments.
The rise in overdue invoices is a clear indicator of the systemic financial issues affecting businesses in the North West.
Broader Economic Implications
The increasing number of overdue invoices could have broader economic implications, potentially affecting employment rates and market stability.
The financial health of SMEs is crucial, as they play a significant role in the regional economy, providing jobs and supporting local communities.
Call for Intervention
Experts are calling for targeted interventions to support SMEs and mitigate the financial pressures they face.
There is a need for comprehensive measures to address the underlying issues contributing to the rise in overdue invoices and support businesses in managing their financial challenges.
The sharp rise in overdue invoices in the North West underscores the financial struggles that SMEs are enduring in 2024.
Without adequate support and intervention, the trend could continue, further exacerbating the financial difficulties of businesses in the region.