Irish SME�s lose �1.7bn annually due to bad debt
A recent Global Business Monitor published by Bibby Financial Services Ireland has found that €13,780 is the average amount written off by every SME in Ireland annually due to customer non-payment or insolvency.
The survey was carried out among over 1,200 small and medium sized enterprises across eleven countries – Ireland, UK, US, Canada, Hong Kong, Singapore, Czech Republic, Poland, France, Germany and the Netherlands.
When asked which area is the most problematic in managing their business cashflow, over half (57%) of Irish SME’s cited collecting payment from customers on time.
Almost a third of SME’s (32%) suffered from bad debt over the past 12 months. With almost 250,000 SME’s around the country, this equates to a total of €1.7 billion in revenue being lost by Irish businesses every single year.
Internationally, German SME’s suffer the most from bad debt with businesses writing off €44,000 per annum on average. SME’s in the Czech Republic write off the least, with an average of €6,200.
Commenting on the research, Head of Business with Bibby Financial Services Ireland, Mark O’Rourke said, “It’s shocking that such a large amount is being lost by Irish businesses each year as a result of bad debt. SME’s need to take steps to ensure they don’t fall foul to non-payment such as completing full background checks on all customers before extending credit, diversifying their customer base and ensuring strict payment protocols are enforced.”
He added, “Furthermore, business owners are often unaware of the broad range of funding options available to them as they wait for debtors to settle outstanding amounts – in many cases, alternative funding solutions are far more suited to their needs than traditional lending options.”