East Midlands construction and agricultural businesses are being given a welcome boost this month as new research reveals that they are amongst the most financially secure of their UK regional counterparts.
February figures compiled by insolvency and restructuring body R3’s Midlands branch, using Bureau Van Dijk’s Fame database, show that fewer than one in four – 23.9% – construction businesses in the region are at higher than normal risk of insolvency, a percentage bettered only by Northern Ireland.
The East Midlands agriculture sector, however, is the UK’s top regional performer, with only around one in six – 14.7% – businesses operating with an above average risk of insolvency. This statistic is over four points below the national average of 19.2%.
In contrast, the news is not so positive for the regional transport and haulage sector, which is struggling more than any of its regional counterparts. More than one in three firms – 37.1% – are at higher than normal risk of insolvency, which is almost four points above the UK average for the sector of 33.3%.
Further East Midlands business sectors less financially secure than the UK average include technology and IT, hotels, pubs, and restaurants.
Commenting on the research, R3 Midlands chairman Chris Radford, a partner at the Nottingham office of Gateley, said: “These statistics demonstrate that we remain in a state of regional economic flux. Where certain sectors are moving towards recovery, there are others which still have significant hurdles to overcome.
“Positive steps are being made by the government, however, which should go some way to supporting regional recovery. For example, new guidance on late payment reporting for large businesses has just been published and welcomed by R3. We hope it will encourage better practice in making prompt payments to suppliers and safeguard the cash flow of our SMEs”.
Radford also pointed out that the region’s businesses are currently enjoying a significant safety net compared to the pre-financial crisis economy.
He said: “Creditors, particularly banks, are much more patient with their borrowers, and companies are benefiting from record low borrowing costs. An increased focus by the insolvency and restructuring profession on early intervention has also helped local businesses avoid formal insolvency procedures.
“There still remains, however, a pressing need for business owners to monitor finances carefully and to plan for all eventualities. If cash flow becomes a major challenge, it’s imperative to seek professional advice sooner rather than later”.