One third of Irish companies face cash-flow squeeze

Almost one in every three Irish businesses have cash-flow problems, while most still experience long delays in getting paid for the goods and services they supply, according to figures released at the weekend.

Trade credit insurer Atradius, one of the two main suppliers of this service in the Irish market, said its latest payment practices survey found that businesses operating in the State were still encountering difficulties.

The company said 32 per cent of the Irish businesses questioned said cash flow remains the biggest threat to their profitability. Around half of those were in either retail or wholesale.

Many businesses still face problems getting paid, according to the survey. On average 10 per cent of debts due from customers remains unpaid 90 days after the due date. This is far higher than the 6 per cent average that Atradius found in western Europe.

The number of uncollectable domestic debts actually rose by 46 per cent over last year, while foreign uncollectable debt was up 79 per cent, the insurer said yesterday.

Nonetheless, Irish companies continue to trade on credit. Its use in domestic trade was up almost 40 per cent on last year and by close to 50 per cent for overseas business.

Atradius country manager Stuart Ramsden said the strains on cash flow were not surprising given the recession. "Risks continue to emerge from the most unexpected corners, where one business is impacted by the insolvency of another, and we see the subsequent domino effect wiping out a number of businesses simultaneously."