80% of Irish SMEs continue to invest in their business, despite threat of Brexit
Despite the threat of Brexit, 80% of Irish SMEs continued to invest in their business as the original 29 March deadline approached, with the main areas of investment being staff training and development (42%), digital and IT capabilities (33%) and additional machinery and equipment (33%). This is according to the latest SME Ireland Confidence Tracker, published by Bibby Financial Services Ireland.
In addition, almost half of Irish SMEs expect to see either a slight (37%) or significant (12%) increase in sales in Q2 of 2019, despite the uncertainty regarding the outcome of Brexit. A further 38% expect their sales to remain steady.
Brexit negatively affecting SME confidence
However, the research found that Brexit was still having a negative effect on SMEs’ confidence, with sales expectations trending downwards since Q3 of 2018, when two thirds of SMEs anticipated an increase in sales.
The focus on investment is set to continue into Q2, with an average spend of €110,000 planned by SMEs over the next three months.
A reduction in operating costs is the major driver of this planned investment, cited by 27% of businesses, followed by a need to keep ahead of competitors (23%) and replace equipment or technology that has deteriorated (19%).
Significantly, of those SMEs that have no plans for investment in the next three months, 55% cite the UK’s exit from the EU as the chief limiting factor, followed by domestic economic uncertainty (38%), and cashflow issues (34%).
Need for state support for SMEs
There is also continued dissatisfaction with the amount of state support provided for SMEs ahead of Brexit, with 63% believing the government should have done more to assist the sector, and 71% identifying a need for tax breaks. Additional measures cited include the need for a lower VAT rate or additional mentoring.
Mark O’Rourke, Managing Director at Bibby Financial Services Ireland, says: “There is continued concern over the amount of support SMEs have received from the government, and any disruption to cashflow and working capital will present a serious threat to businesses’ profitability. Many SMEs are unaware of the range of financing options available to them – including invoice financing – that can offer them greater support and flexibility in everyday operations and in growing their business.”
The survey also found that over a third of SMEs (34%) have suffered a bad debt over the past twelve months, although this figure is down 5% since Q3 of 2018, with the average length of time taken to receive payment remaining steady at 33 days.