| news home | subscribe | submit an article | pre-Sept 09 news archive |
|
|
|
© Business Money Ltd 2010 |
|
|
If you're not
communicating with your clients, who is? |
|
|
Business Money Magazine |
New research conducted by commercial credit reference agency Graydon UK reveals that four out of five credit managers believe that public sector spending cuts will spark a sharp increase in business insolvencies within the next 12 months. According to the survey, nearly two thirds (64%) of credit professionals anticipate that business failure rates will rise by more than 10% during the coming months, with 13% of those questioned forecasting that the insolvency hike will exceed 20% as public sector agency buying power is diminished. Despite this warning that the knock-on effect on the wider economy is set to be painful, only one third of the companies they represent (33%) are already monitoring actively their customers’ reliance on public sector contracts as a source of revenue as an established part of their own supply chain risk management process. Meanwhile, despite the looming prospect of a surge in company failures, just under half (49%) of credit managers questioned agree or strongly agree that a rise in business failures will be a price worth paying in order to restore the UK’s future economic stability. Martin Williams, managing director, Graydon “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.” In addition to public spending cuts, the survey also revealed that four fifths (79%) of respondents agreed that the rising number of rejections by HMRC to businesses applying for its Time to Pay tax deferral scheme will add to predicted rise in insolvencies across the UK. Martin added: “HMRC is clamping down on firms’ requests for additional time to meet their tax liabilities. Credit managers are already anticipating the critical impact this could have on businesses already struggling to meet their other financial obligations, in particular those who did not set cash aside to pay the tax man when times were good economically. “And although firms can take steps to assess how they will be affected by public spending cuts they cannot anticipate how they will be affected by the winding up of the Time to Pay programme as HMRC has refused to publish a list of applicants. “The government’s reasoning here is justifiable as by revealing which businesses are asking for additional time, HMRC risks inadvertently shutting off those companies’ other credit lines. Further corporate failures would be the inevitable consequence of this, and HMRC needs to protect its position now that it has lost its preferred creditor status.” Other Business Money News
| ||||||||||||||||||
