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News Release from: Equifax | Subject: Business Failures Report
Edited by the Marketingservicestalk Editorial
Team on 24 July 2007
Services sector leads business failure
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The latest Equifax Business Failures Report reveals that London and the Services sector have experienced the highest increases in businesses going bust in the second quarter of 2007.
Equifax, the business information specialist and compiler of the report, suggests there could well be a connection between the high increases in failures in the London region and in the Services sector, which is well represented in the capital "Whilst Quarter 1 2007 saw an overall drop in failures year on year, the second quarter hasn't been quite as positive with an overall increase in failures of 4.5 per cent," confirmed Neil Munroe, External Affairs Director, Equifax
This article was originally published on Marketingservicestalk on 7 Mar 2008 at 8.00am (UK)
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"In particular, the high increase in businesses going bust in London and the Services sector at 18.2 per cent and 24.7 per cent respectively could be an early warning sign of the impact of recent interest rate rises on the business economy".
The Transport sector, which plays a key supporting role to the Services industry, also saw quite a significant increase in failures in Quarter 2 at 13.1 per cent.
However the Manufacturing industry saw a 10.9 per cent drop, which probably reflects the continued consumer demand that is being experienced across the UK.
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"The 4.5 per cent increase in business failures for Quarter 2 should send a warning shot across the bows of UK business", confirmed Munroe.
"This is a turnaround from the small drop in failures seen in Quarter 1 and means that all businesses of every size should be taking all the precautions possible to avoid the risk of bad debt.
"But it is small businesses in particular that are the most vulnerable to the effects of bad debt and it is therefore essential for them invest in tools that help reduce their financial risks".
The industry sectors that appear to be performing best in Quarter 2 include the Manufacturing with a 10.9 per cent drop in failures year on year and Retail with a 0.2 per cent drop compared to Quarter 2 2006.
Whilst seeing an increase in failures year on year at 1.4 per cent, the Construction sector also seems to be performing relatively well.
From a regional perspective, alongside London, the South West and Scotland saw high levels of failures year on year at 15.5 per cent and 8.6 per cent respectively.
The regions that performed best in Quarter 2 were the North East with a 12.4 per cent drop in failures and Northern Ireland with a 20 per cent drop year on year.
"It is crucial to recognise the catastrophic effect the failure of customers or suppliers can have on an organisation", concluded Munroe.
"That's why it's crucial to not only do the initial checks, but maintain ongoing monitoring which will highlight changes in a customer's financial status and ensuring businesses always know who they're doing business with and understand the risks.
"They will then be able to avoid the threat of fraud and bad debt, which can all too easily lead to their own failure".
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