Small businesses are being urged to be more selective with whom they do business with following investigations into the accounts of major industry sectors.
A report, by credit insurer Atradius, warns suppliers to check their bad credit provision when dealing in certain sectors being monitored by the Financial Reporting Council (FRC).
The sectors and organisations being scrutinized over the next two years are ones that are vulnerable to accounting errors or changes in accounting regulations, as well as those experiencing difficult trading conditions.
Companies dealing in pharmaceuticals, retail, transport, utilities and automobiles are to be watched closely by the FRC.
Tony Garner, business development manager at Atradius, said: "The FRC has identified these five industries, so it obviously thinks there is a greater risk here than in other sectors.
"Although it has not identified any specific concerns, it would be sensible for suppliers trading with these industries to beef up measures to protect themselves from the risk of debt, such as taking out credit insurance and credit checking new customers."
In addition to the five industry sectors, the FRC said that they are to become more proactive in monitoring financial reporting standards from smaller companies and large private companies, to ensure small suppliers are made aware of trading conditions.
