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News Release from: Equifax | Subject: Equifax Business Failures Report
Edited by the Buildingtalk Editorial
Team on 25 January 2008
Business failures up as credit crunch
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Equifax Business Failures Report reveals widespread increases across most sectors in Quarter 4 2007.
According to the Equifax Business Failures Report for Quarter 4 2007, despite gloomy predictions for Christmas, the retail market saw just a 1.8% increase in business failures compared to the same period in 2006 And encouragingly, the Retail sector saw a drop in businesses going bust for the year as a whole, with numbers down 3.1% when compared to the 12 months of 2006
This article was originally published on Buildingtalk on 15 Dec 2006 at 8.00am (UK)
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However, as leading business information provider Equifax revealed, most other industry sectors were hit hard in Quarter 4 of 2007 with an increase in business failures of 5.7% overall compared to the same period in 2006.
A rise in the number of businesses going bust could be a sign that the credit crunch is starting to have an impact warns Equifax.
"Business failures were up in most sectors in Quarter 4 as the credit crunch began to take its toll on the UK economy" confirmed Neil Munroe, External Affairs Director, Equifax.
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"The Construction industry suffered the most in the last Quarter with a 16.6% rise in failures, followed by the Services sector at 13.8%, and the Wholesale sector at 11.8%.
And, as we enter the first Quarter of 2008, businesses are under increasing pressure as lenders continue to tighten their purse strings, making it essential for them to monitor their customers and accounts to avoid the threat of bad debt".
There was, however, some good news for the last Quarter and the year as a whole.
Manufacturing continued to enjoy a strong year with failures down by 7.8% in Quarter 4 and down 9% for the year as a whole.
The Transport and Communications sector also fared well with a drop of 5.2% compared to the latter part of 2006 and down 1.6% compared to the whole of 2006.
The regional picture showed that Wales bore the brunt of the failures in Quarter 4 with a massive increase of 36.7%, ending a difficult year.
Things weren't any easier for Yorkshire and Humberside up 29% or the East Midlands suffering a 20.4% rise.
Scotland had a good final quarter to the year with a 13.6% drop in businesses going bust, but overall the region still saw a 7.6% rise in failures in 2007, showing that there is a still a considerable level of risk for all businesses unless the right precautions are taken on an on-going basis.
The East of England also saw failures fall in Quarter 4 2007 by 12.9% and a 4% drop for the year as a whole, with the South East the only other region to see a fall for the Quarter of 7.5% and for the year of 6.2%.
"The regional picture of business failures for the last Quarter of 2007 seems to suggest that the credit crunch had an impact pretty much countrywide," confirmed Neil Munroe.
"Added to this, most sectors suffered an increase in failures, proving that organisations must do more than ever to protect themselves from the risk of failure.
In particular, they need to ensure that bad debt doesn't hamper their own stability and growth.
By monitoring the financial status of customers and suppliers, businesses can prepare for the worst and minimise the impact on their own profits.
"Small businesses are very vulnerable to bad debt.
It only takes one customer to go bust, to jeopardise the future of a business.
Rigorous credit checks, supported by ongoing monitoring of changes to the financial status of customers and suppliers are the best ways to secure the future of their business.".
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