IT contractors working for firms that supply the public sector should take steps to protect themselves in the event of a payment default.

This is because the number of public sector suppliers going bust has leapt up by 47 per cent in the last 12 months, according to research from accountancy firm Wilkins Kennedy.

The rise has occurred despite the number of insolvencies as a whole falling by five per cent - perfectly illustrating the knock-on effect of the government's austerity measures for private businesses.

Much of the focus regarding the public cuts has been on reduced profit margins for listed companies, but for smaller operations the situation is much more serious, claims Wilkins Kennedy director Anthony Cork.

"Supplying to the public sector has been seen as safe and steady, unfortunately that is no longer the case," he said.

The Recruitment & Employment Confederation believes that using flexible workers, such as IT contractors, can help the public sector save money and maintain services.