North East Businesses Hit by Wave of Unpaid Invoices Amid Growing Financial Strain
Businesses across the North East are grappling with mounting financial pressure, as new data reveals a sharp surge in unpaid invoices — a clear warning sign of deepening economic trouble in the region.
According to figures released by restructuring trade body R3, there were more than half a million overdue invoices on the books of North East firms in the second quarter of 2025. Specifically, 523,065 invoices remained unpaid — a 16.5% increase compared to the same period in 2024, making it one of the steepest regional rises in the UK.
The number of businesses affected is also on the rise. R3’s analysis, based on data from Creditsafe, found that 40,587 companies in the North East had overdue invoices on their books in Q2 of this year — up from 37,324 a year earlier, representing an 8.7% year-on-year increase.
These troubling numbers come at a time when other indicators of the UK economy are also flashing red. Inflation continues to climb, GDP is shrinking, and the latest regional unemployment figures — due tomorrow — are expected to bring more unwelcome news.
Cash Flow Crisis Looms
Kelly Jordan, Chair of R3 in the North East, warned that the growing backlog of unpaid invoices is a symptom of deeper financial stress among businesses.
“The sharp rise in overdue invoices across the North East is a clear sign that increasing financial pressures are taking their toll on businesses,” said Jordan. “Delayed payments can quickly escalate into cash flow problems, putting companies at real risk if they fail to take action early.”
She pointed to recent policy changes, such as the increase in employers’ National Insurance contributions and a higher minimum wage, as additional burdens that are tightening already thin margins for many companies.
“Businesses that were already running on tight financials are being pushed even closer to the edge,” Jordan added.
The Cost of Late Payments
Late payments remain a persistent challenge for smaller businesses. Research by the Department for Business and Trade and the Federation of Small Businesses estimates that the problem costs each small firm an average of £22,000 a year, and is responsible for as many as 50,000 business closures annually.
In response to this crisis, the Government launched a consultation last year aimed at cracking down on late payments, particularly by larger firms, promising to implement measures that would hold big businesses accountable and improve cash flow for smaller suppliers.
Still, the situation on the ground suggests many businesses are yet to see relief.
A Warning Sign for What’s Ahead
While the presence of overdue invoices doesn’t necessarily mean a company is heading for insolvency, experts warn they can be a precursor to more serious financial trouble.
“We’ll have a clearer picture of how this trend is impacting insolvency levels when the next round of monthly statistics is released later this month,” said Jordan. “But it’s already evident that more businesses are feeling the strain.”
Jordan urged business owners to remain vigilant and act quickly if they spot warning signs such as persistent late payments, rising debt, or difficulty meeting payroll obligations.
“Recognising the early indicators of financial distress is vital,” she advised. “Seeking professional advice early can be the difference between recovery and collapse.”
With every region in the UK seeing a rise in businesses with overdue invoices, the North East is far from alone in facing these challenges — but the steep increase in this region signals a potentially worsening economic climate for local firms. As financial pressures mount, the need for proactive management and early intervention has never been more critical.