Home > Financial > 24% of firms had ceased trading temporarily or permanently in April

24% of firms had ceased trading temporarily or permanently in April

Written by Robert McHugh, on 21st Jul 2020. Posted in Financial

article headline

The Central Bank of Ireland has today published its SME Market Report for 2020 with a special focus on the challenges to firms posed by Covid-19.

The Report aims to provide a timely monitor of developments in the provision of credit to Irish Small and Medium Enterprises (SMEs) by financial intermediaries.

The survey evidence suggests 24% of firms had ceased trading temporarily or permanently in April but this declined to 11% by May 31st. Credit balances were almost fully utilised in the Accommodation & Food sector in May with scope for further drawdowns of existing credit in other sectors.

Furthermore, banks report SME lending standards have tightened in the first half of the year and are also expected to tighten slightly in Quarter three.

The firms show that the shock to firms’ turnover has been large (21% of firms report turnover is 75% lower), but differs by sector. Firms with the most constrained revenue have reduced their non-personnel costs the most, those reporting revenue declines of over 50% have reduced non-personnel costs by 43%. But 39% of firms have not reduced costs, increasing to 60% where revenues declined 10-49%.

The Accommodation & Food sector have reduced non-personnel costs the most – 49% of firms in this sector have reduced non-personnel costs by more than 50%.

Survey evidence suggests 39% of firms have unpaid invoices, amounting to around 20% of 2019 revenue for the typical firm, which may pressure cash flow or amplify shocks upon company failure.

As many as 42% of firms report changing or deferring payments to manage cash flow, increasing to 91% of firms in the Accommodation & Food sector.

Source: www.businessworld.ie

More articles from Financial

image Description

Possible extra support for SMEs in October budget

Read more
image Description

Economic impact much worse than thought in June says Varadkar

Read more
image Description

Exchequer continues to count the cost of pandemic spending schemes

Read more
image Description

Irish income tax take beats expectations again in July

Read more
image Description

PTSB extends half of COVID-19 payment holidays

Read more