Saffron Johnson, Accountancy Age, Monday 26 July 2010 at 15:16:00

Credit professionals predict that the public sector's efficiency drive willpush up business insolvencies

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

Nearly two thirds (64%) of credit professionals think business failure rateswill rise by more than 10%, with 13% of those predicting failure rates to exceed20%, according to research by commercial credit reference agency Graydon UK.

Martin Williams, managing director,GraydonUK, said: ?Despite the prospect of a commercial insolvency bouldergathering momentum as it rolls down the economic hillside, the potential dangershave not yet been recognised by other operational areas.?

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

Williams said: ?Firms need to heed this warning now and ensure they are fullyequipped to monitor exposure to public sector based revenues across the entirelength of their supply chains. The failure of a key supplier or customerdependent upon government contracts could inflict huge damage to businessstability at very short notice.?

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

Further reading:

Overpaidtax could run to 3bn

ReadMartin Williams' Blog