One in three SMEs admits they had to write off more bad debts this year

One in three SMEs in Ireland have had to write off bad debts in the last 12 months, with an average of €18,543 written off by companies.

ibby Financial Services Ireland, which provides financing solutions for SMEs, conducted the survey of 200 companies and found that bad debts were mainly due to customer defaults or bankruptcies. Wholesale trade was hardest hit, with 43 percent of businesses having to write off bad debts. It was followed by business and professional services (38 percent) and transportation (38 percent).

More than two out of five respondents stated that they had noticed a deterioration in the payment time of an invoice. In the last three months, it took an average of 28 days for payments to be disbursed to SMEs – with SMEs in construction (37 days) and transport (32 days) requiring disbursement the longest.

The survey found that tracking unpaid bills is the top funding issue for SMEs, cited by nearly a third (32 percent). Construction was the main sector that said it was their main concern (45 percent), followed by transportation (38 percent).

Many companies turn to external financing to fund their business

The other top concerns for SMEs are managing the risk of customer defaults/bad debts and effectively managing day-to-day cash flow – both of which are cited by just over a quarter of respondents.

SMEs with a turnover of between €5m and €10m said they find accessing finance the most difficult (27%), while SMEs with a turnover of between €10m and €25m struggle to get it manage daily cash flow (53 percent). .

While almost two-thirds (61 percent) said their company’s cash flow is stable and meets their needs, 27 percent felt they didn’t have the cash flow needed to grow. As a result, many companies are turning to external financing to fund their business.

The most popular forms of financing include business loans, credit cards, private equity, bank overdrafts, and invoice financing.

Referring to Ulster Bank and KBC’s exit from Ireland, 55pc said those who have had to open a new business account were finding it difficult to find a “human” to talk to to discuss their problems. Another 36pc said the significant fees incurred and cash flow issues caused by re-applying for overdrafts were a problem.

Mark O’Rourke, Managing Director at Bibby Financial Services Ireland said: “These results clearly demonstrate that managing cash flow and accessing working capital is an ongoing consideration for SMEs.” One in three SMEs admits they had to write off more bad debts this year

Fry Electronics Team

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