SMEs brace themselves for the loss of public sector orders
Following the trend of declining public sector orders as many as 150 thousand country’s small businesses may be facing insolvencies, reports the R3 insolvency trade body R3.
According to the research almost ten per cent of firms may be in this predicament, which the organisation claims is reflective of an overall trend, with one third of small businesses describing themselves as 'reliant on contracts from the public sector'.
The report found that this scenario would have a "dramatic effect" on the current levels of corporate insolvency, as business failures only ran to 26,000 for the whole of 2009.
R3's president Steven Law said that firms have already drawn heavily on their reserves to survive the recession and will be unable to compete in the market as the economy grows.
"This comes against a backdrop of corporate insolvency figures being kept down by HMRC's Time to pay agreements and historically low interest rates," he concluded.
According to the latest figures issued by National Association of Commercial Finance Brokers levels of invoice financing processed by its members have been steadily increasing for the past three years and doubled since 2007.
Source: Factorscan BCR