North East business tackling strain of more than 482,000 overdue invoices, research shows

Insolvency experts have warned of the growing strain overdue invoices are placing on North East businesses, with firms currently tackling almost half a million unpaid bills.

The region’s firms have seen a 6.8% jump in unpaid bills in Q3 2024 compared to the same period in 2023, according to R3’s analysis of data provided by Creditsafe. In all, North East firms had 482,174 invoices that had gone past their payment deadline on their books in Q3 2024 – with 156,554 in July, 162,568 in August and 163,052 in September.

The region faring the worst was the West Midlands, which has seen a 50.3% rise year-on-year, followed by Scotland on 33.6% and the South West on 12.1%.

Kelly Jordan, chair of R3 in the North East, said: “While the rise in overdue invoices in the North East has been more modest compared to some other regions, it remains a warning sign of the financial strain many businesses in the region are still facing. Costs are continuing to rise, albeit at a slower pace, and it’s becoming increasingly more difficult to pass on these extra costs to customers or to cut back in other ways.

“As a result, businesses are experiencing tighter margins and cash flow challenges, making it harder to keep up to date with the payments they owe.”

The huge number of invoices were on the desks of more than 38,000 North East businesses in the third quarter of the year – with 12,615 firms in July, 12,771 in August, and 12,754 in September. This is 3.5% higher than the same period in 2023 which saw 36,843 North East businesses fail to pay their bills on time.

Ms Jordan, who is a partner at Muckle LLP, added: “Although the number of companies with overdue invoices on their books fell slightly in September, the overall trend shows a consistent quarterly rise and numbers for that month are higher than in September 2023. These figures have been steadily increasing throughout the year and are significantly higher than they were last year.

“Without a consistent improvement in payment practices or cash flow, many companies may find it increasingly difficult to manage their debt and maintain operations, and we could see more and more businesses turning to a formal insolvency solution as a result.

“I would urge business owners and directors that are struggling to pay their bills on time to seek advice as soon as they can. Taking that first step can be hard, but by having the conversation early, you will have more time and more options available to you than if you’d waited for the problem to get worse.”

Last month the Government announced the New Fair Payment Code – measures to support small businesses and the self-employed by tackling the scourge of late payments, which leads to 50,000 business closures a year according to the Federation of Small Businesses.