Business insolvencies to surge from public sector cutbacks

Credit managers expect business insolvencies to leap by more than 10% within
the next 12 months.

Nearly two thirds (64%) of credit professionals think business failure rates
will rise by more than 10%, with 13% of those predicting failure rates to exceed
20%, according to research by commercial credit reference agency Graydon UK.

Martin Williams, managing director,
, said: “Despite the prospect of a commercial insolvency boulder
gathering momentum as it rolls down the economic hillside, the potential dangers
have not yet been recognised by other operational areas.”

Even with the warning from credit professionals, just one third of companies
are monitoring their clients’ exposure to the public sector.

Williams said: “Firms need to heed this warning now and ensure they are fully
equipped to monitor exposure to public sector based revenues across the entire
length of their supply chains. The failure of a key supplier or customer
dependent upon government contracts could inflict huge damage to business
stability at very short notice.”

He added that the taxman was clamping down on companies’ requests to defer
their tax under the Time to Pay scheme. Because of this, there is a risk that
other credit lines will shut.

Further reading:

tax could run to £3bn

Martin Williams’ Blog

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