Bad debt warning for FRC-targeted industries
Companies acting as suppliers for the industries earmarked for extra scrutiny by accounting's watchdog this year have been warned to check their bad debt provision.
Link: Watchdog targets accounts of five risky industries
During 2005, the Financial Reporting Council (FRC) is to examine closely the accounts of companies in the automotive, pharmaceutical, retail, transport and utilities industries. It believes these industries could be particularly vulnerable to changes in accounting regulations or are experiencing difficult trading conditions and may be more susceptible to accounting errors.
As a result, credit insurers are warning suppliers to take extra precaution when dealing with companies in these sectors.
‘The FRC has identified these five industries, so it obviously thinks there is a greater risk here than in other sectors,’ said Tony Garner, business development manager at credit insurers Atradius.
‘Although it has not identified any specific concerns, it would be sensible for suppliers trading with these industries to beef up measures to protect themselves from the risk of debt, such as taking out credit insurance and credit checking new customers.’