Report reveals Irish SME concerns over pandemic effects

Latest survey shows how businesses are coping with Covid-19

Over half of SMEs say social distancing has impacted on new business

New research from Bibby Financial Services Ireland reveals concerns among Irish business owners

  • Almost a quarter will only be able to cover costs for the next 3-6 months
  • 20% of SMEs believe it will be over a year before they return to pre-lockdown levels of productivity

Over half (54%) of SMEs believe social distancing has reduced their ability to take on new business. Meanwhile, despite the measures introduced under the recent July Stimulus package, 20% of Irish SMEs believe it will more than a year before they return to the productivity levels they enjoyed prior to lockdown. This is according to new research from Bibby Financial Services Ireland, a leading provider of financial support and funding solutions to Irish SMEs.

In addition, only a quarter (24%) of SMEs say they will be able to cover their business costs for the next 3-6 months if the current situation continues.

Our research reveals the stark reality currently facing Ireland’s SME sector.
Mark O’Rourke, Managing Director of Bibby Financial Services Ireland

The research also reveals that while 72% of SMEs are supportive of the Government’s efforts during the crisis, and 65% are optimistic about the future of the economy, 42% of businesses have had to turn down new orders because they are unable to fill them. Additional obstacles for SMEs attempting to secure new business include being unable to hire or bring back staff (31%), and not having the working capital to buy raw materials (21%).

The findings also highlight the chief concerns of business owners across the country. Cashflow difficulties remain the biggest challenge to SMEs (34%), followed by a loss of customers (31%) and staff losses (14%). Bankruptcy remains a pressing concern for 14% of businesses.

In response to the pandemic and the restrictions introduced, 35% of SMEs say they had to lay off staff, while 38% closed parts of their business, either temporarily or permanently. Almost a third (30%) say they withheld payment to some suppliers, demonstrating the impact the crisis has had in constricting the supply chain.

The research also surveyed SMEs’ attitudes towards the ongoing trade deal negotiations between the EU and the UK. Some 61% of SMEs are optimistic a trade deal can be done, however the cost of failure would be significant, with 63% believing there would be a negative impact on their business if a deal cannot be agreed, compounding the effects of Covid-19.

Over four in five (83%) SMEs were not using external finance prior to the Covid-19 pandemic – however 66% of those now say they would be more likely to do so in future. Bibby Financial Services Ireland has therefore highlighted how businesses should not overlook the benefits of invoice finance, which can be quickly provided and used on a short-term basis to support cashflow and working capital requirements.

Commenting on the research, Mark O’Rourke, Managing Director of Bibby Financial Services Ireland, said: “Our research reveals the stark reality currently facing Ireland’s SME sector. While most commend the Government’s handling of the Covid-19 crisis, the measures needed to deal with it are having a lasting and profound impact on SMEs.

“Many are dealing with severe cashflow difficulties as a result of supply chain disruption, while the need to ensure social distancing is also causing logistical challenges and making margins tighter.

“Despite this we are glad to see that SMEs are casting the net wider in terms of the financial supports available to them. Many will be reluctant to take on additional debt when already faced with mounting overheads and an uncertain economic landscape, so it’s encouraging to see the growing proportion of businesses contemplating services like invoice finance.”

Bibby Financial Services Ireland is a leading provider of financial support and funding solutions to Irish SMEs. The company helps businesses to thrive and grow in domestic and international markets by providing tailored and flexible funding solutions for a range of scenarios including cashflow funding, new equipment purchase, growth and expansion, management buy-ins and buy-outs, refinancing, corporate restructuring and mergers and acquisitions.

Bibby Financial Services Ireland’s funding portfolio includes confidential invoice finance, trade finance and export finance, foreign exchange services, bad debt protection and specialist funding for a range of sectors. With a 95% client satisfaction rating, our clients have confidence that we support their business.

Bibby Financial Services Ireland is part of Bibby Financial Services Group, a leading global financial services partner operating in 40 locations across 14 countries. With 40 years’ experience, the business has a funding capability that exceeds £1 billion and an annual collective client turnover of £10.1 billion.

24 August 2020

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