54% of SMEs say social distancing has reduced ability to take on new business: Bibby

Over four in five (83%) SMEs were not using external finance prior to the Covid-19 pandemic, but 66% of those now say they would be more likely to do so in future, according to Bibby Financial Services

20% of SMEs believe it will be over a year before they return to pre-lockdown levels of productivity, with almost a quarter only able to cover costs for the next 3-6 months, according to new research by Bibby Financial Services Ireland



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25 August 2020

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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.

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. What’s more, 54% of SMEs say social distancing has reduced ability to take on new business.

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.

Mark O’Rourke, managing director of Bibby Financial Services Ireland, said the research showed the “stark reality currently facing Ireland’s SME sector”.

“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,” O’Rourke added.

“Despite this we are glad to see that SMEs are casting the net wider in terms of the financial supports available to them,” he said. As a means of avoiding taking on additional debt, O’Rourke said “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 study is based on Bibby Financial Services’ Covid-19 Pulse Survey – a poll of 200 Irish SME owners and decision makers across the manufacturing, construction, wholesale, transport, retail and services sectors. Fieldwork for the survey ran from 31 July – 10 August 2020 and research was conducted by Critical Research.

For more information about Bibby Financial Services Ireland, visit: www.bibbyfinancialservices.ie






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