Belfast Telegraph

Wednesday 16 April 2014

Firms say cash flow is their biggest headache

Almost half of businesses in Ireland are struggling with cash flow, according to a new report out today.

It says 41% of firms believe it is the single most important issue facing them this quarter — that figure is up from 39% in the previous survey.

Intertrade Ireland’s quarterly all-island business monitor survey quizzed 1,000 owners/managers — 500 from the north and 500 from the south.

Respondents claimed one of the problems contributing to the issue has been the increased demand from a third of customers who have requested longer payment terms.

One in five companies (20%) |also cited encouraging bank lending as something that government could do to help them.

Aidan Gough, Intertrade Ireland policy director, said: “This quarter’s results show that recovery is precarious and will need nurturing by both governments.”

Around half of businesses (51%) across the north and south recorded a fall in profitability between January and March this year, with the same number reporting a drop-off in turnover.

Companies reporting a severe or moderate impact from the downturn remained high at 86%.

Mr Gough said: “There are still |significant concerns about the prospects for the economy amongst business and the numbers experiencing severe impacts from the downturn remain high.

“The survey presents a picture of |difficult trading conditions for businesses.”

Although firms are taking action |to stimulate demand for their goods and services, with 53% reducing prices during the past six months, companies have yet to reap the rewards of their |efforts.

Looking ahead, the vast majority of companies (88%) intend to review their business strategy in the coming year, with plans to diversify into |new markets, develop new products and services and reduce costs.

Energy costs in particular were |highlighted by businesses as the |area to be tackled, with improvements in energy efficiency, switching suppliers or renegotiating existing contracts cited as the most common actions proposed.

Mr Gough continued: “Businesses have taken significant steps to restructure. Undoubtedly, closures and cost reductions have been the difficult side of this for employers and employees alike.

“However, businesses are also looking to the future. Innovation and diversification into new markets has been identified by companies as important to their future success.

“Supporting firms in these efforts will continue to be a key part of Government policy and the activity of Intertrade Ireland going forward.”