Around three quarters of Northern Ireland firms say they have suffered a “serious decline” in income in the last few days while the vast majority plan to furlough some employees amid the ongoing coronavirus crisis.
Just shy of two thirds of companies here say they have fewer than three months of cash reserves, while around 10% say they have none at all.
That’s according to the latest Northern Ireland Chamber of Commerce and Industry survey, with BDO.
More than a third of businesses quizzed between April 1 – 3 say they have closed their operations temporarily, while 30% intend to furlough all of their staff through the Coronavirus Job Retention Scheme, and a further 17% of businesses said they do not intend to furlough anyone at this point.
“The Covid-19 pandemic is a public health crisis that has huge consequences for everyone in society, and the health and wellbeing of our people is our primary concern,” Ann McGregor, chief executive of the NI Chamber said.
“As a business representative body this survey has highlighted that there is also a startling negative impact on business and the economy which is significant for our future when we emerge from the crisis.
“The main issue is cash flow and it is alarming to see that one in ten businesses who responded to the survey have no reserves set aside and a further 63% have less than 3 months cash reserves left. For manufacturers, ‘Just in Time’ processes mean cash flow can be tight in normal times.
“This cash flow issue is being exasperated by slow or non-payments and difficulty accessing the various funds. Even where there is some activity on order books, businesses are finding that customers are becoming increasingly reluctant to pay quickly, worsening the cash flow problem. Firms may be able to avail of rates relief and furlough staff but they can’t survive without income and in this challenging time are anxious about increasing their debt. They also cannot afford to wait weeks or months for reimbursement from the various support schemes to arrive.
And Brian Murphy, managing partner, BDO, said: “The business community has had to react in a rapid and dramatic way to the truly dreadful circumstances caused by Covid-19. It has created a severely challenging and unpredictable environment which has forced difficult decisions to be made. Few sectors have been unaffected by Covid-19; with the hospitality, manufacturing and services sectors in particular, feeling a huge impact on their operations, employees and supply chains.
“As our business community has demonstrated in the past, it is resilient and where possible, businesses have restructured their operations and working environments to protect their employees and their trading. We at BDO and many of our clients have also responded through home working, the use of technology to continue communications with colleagues and customers and in some cases, by altering product and service offerings.
“However, it is no surprise that there has been a significant fall in revenue in a very short space of time, something which many companies simply could not have planned for. This drop has been made even more difficult by the fact that many companies do not have cash reserves to see them through.”