Turnover in the business services sector plummeted in Q4 2010, according to the latest Bibby Financial Services’ Business Factors Index.

The Index posted a reading for the business services sector reading of 87.3 in December, down from 92.5 in September 2010.

However, Q4 turnover was still 7% higher than Q4 2009.

Edward Winterton, recruitment finance specialist at Bibby Financial Services, says: “It’s concerning that the business services sector remains the worst-performing industry after a promising revival in the third quarter of 2010. The knock-on effects from the Comprehensive Spending Review appear to have had the biggest negative impact on firms in the sector and with public sector cuts ongoing any thoughts of a full recovery must be put on hold.

“The key issue now for the sector is about stabilising business performance and trying to ensure this doesn’t continue to decline in to 2011. With the public sector cuts, the VAT rise and the growing uncertainty over the state of the UK economy, it is vital businesses have the financial support to secure long-term stability and manage fluctuating demand for services.

“The ability to ensure a healthy cash flow through the business is likely to become increasingly difficult in the coming months as firms negotiate a treacherous business landscape. Flexible sources of finance such as invoice finance offer a financial liquidity that enables firms to either stabilise their business or pursue opportunities for growth. This will be important to satisfying the needs of the UK business community as firms experience varying trading conditions across different regions and sectors.”