A RISING number of businesses are failing to pay invoices on time, an insolvency expert has warned.

The figures suggest a rising number of businesses could be “trapped in a vicious circle”, waiting to be paid before they can meet their own commitments.

Data from business intelligence provider Creditsafe showed the number of south east companies owing money in excess of agreed credit terms rose from 67,175 in September to 67,444 in October – the highest total for eight months.

There was also a month-on-month rise in unpaid late invoices from 778,528 in September to 810,830 in October.

However, the number of start-ups rose from 5,360 to 5,854 month on month.

Insolvency-related activity – such as creditor voluntary liquidations, company voluntary arrangements, administrations and creditors’ meetings – fell from 215 to 164.

Garry Lee, chair of the insolvency industry body R3’s Southern and Thames Valley region and associate director at Evelyn Partners in Southampton, said: “These latest figures reflect the economic turbulence making itself felt in the regional economy.

“While the month-on-month increase in the number of start-ups and the fall in insolvency related activity is encouraging, these figures may mask deeper and more pervasive problems.

“The rise in late payments could suggest that cash-flow is becoming of an issue for some business owners and directors who may be trapped in a vicious circle of waiting to be paid before they can meet their own financial commitments.

“Diminishing fluidity can have a ripple effect throughout supply chains and regional economies, resulting in an increase in insolvency related activity or even an insolvency tsunami in the worst case scenario.

“Economic trends are often more pronounced in the south east because of the region’s dynamism and wide mix of businesses, which can provide an indication of the general direction of travel for the wider economy.

“Cash remains king for many businesses, and cashflow difficulties are often one of the warning signs for owners and directors.

“Any company experiencing problems of this kind in Hampshire and Dorset or facing other signs of financial distress is urged to seek help as soon as possible.”