Small businesses owners should use rigorous credit checks to verify the health of customers after research revealed an increase in the number of business failures in October and November.
According to Equifax, there was a 27% increase in the number of firms going to the wall in the two months compared to the same period last year. This is on top of a 20% rise in the third quarter and a 10% and 9% hike in the second and first quarters of 2008 respectively.
The rise was most notable in the construction industry, which saw a 48% increase, and transport and communications (47%). The services sector (19%) and manufacturing (18%) also saw big jumps.
"With significant downturns in orders, combined with restricted access to credit for a wide range of business organisations, it is not surprising that some have simply had to close their doors for good in the last couple of months," said Neil Munroe, external affairs director at Equifax.
"Hopefully the initiative taken by at least one bank over the weekend to inject funds into business lending could stem this flow of failures."
The figures also revealed regional variations in terms of companies closing. Manufacturing hotspot the north-east saw a 48% jump in failures, with the East Midlands (40%), the south-west (38%) and Yorkshire & Humberside (37%) all faring badly.
There was a rise in failures across the country, with the east of England (17%) and London (18%) the least affected.
"While many businesses are doing all they can to protect themselves from failure, there is no doubt that external factors, such as lack of credit to fill gaps in cashflow, could have much greater consequences," added Munroe.
"Now more than ever it is crucial that businesses continue to use rigorous credit checks, alongside ongoing monitoring of the financial status of their customers - and suppliers - to protect their future.
"By operating best practice and harnessing the power of the latest risk management solutions, firms can at least minimise the threat of bad debt."