Yorkshire SMEs most at risk of going bust

The study found that Yorkshire small businesses face the highest risk of insolvency contagion in the UK.

Nimbla surveyed 2,000 SMEs across Britain, and found that they have lost a total of £2.2bn in revenue (for goods and services provided during lockdown), because of customers falling into administration.

With insolvencies set to rise sharply in the next few months, Nimbla said a lack of confidence and unfavourable payment terms could hamper growth in Yorkshire.

One in 10 Yorkshire firms are waiting to be paid as much as £70,000 for completed works, and 55 per cent of these believe they will never be paid.

Flemming Bengtsen, CEO at Nimbla, said: “The impact the lockdown has had on SMEs, who are the heart and soul of the UK economy, is astonishing.

"Many Yorkshire firms have survived several attacks during the pandemic and, now, knowing they won’t get paid for the work they did is another huge body blow.

"There could be more bad news on the horizon for smaller businesses as high street chains face difficulties and potentialinsolvencies.”

Two thirds of businesses (66 per cent) are worried by the prospect of customers asking for longer payment terms.

If a customer did collapse, 52 per cent of firms said they would react by asking for deposits and shortening payment terms.

Nimbla said this could lead to a dearth of credit in the region, further impeding recovery.

It said that businesses in Yorkshire have also suffered disproportionately from bad debt in recent years.

In pre-pandemic times, a quarter of SMEs lost between £50,000 and £500,000 due to unpaid invoices.

Nimbla said that although a quarter of businesses in Yorkshire tread carefully on trust with their customers, just 5 per centhave any form of insurance against bad debt.

A fifth of businesses expect one or more major customers to become insolvent by the end of the year.