Two in five businesses in Northern Ireland have no system in place to protect themselves from debt and poor cashflow issues, the Northern Ireland Chamber of Commerce (NICC) has found.
In its latest quarterly economic survey, nearly a third (31 per cent) of businesses said that their level of debt had increased over the last 12 months – in addition to a worsening cashflow position for 32 per cent of businesses during the final quarter of 2012.
The NICC said business stability as a result of bad debt was a worsening problem in the country, with a third of businesses believing it will affect their business over the coming year.
According to the survey, 18 per cent of businesses said the time taken to pay trade invoices had increased over the past 12 months, while for 71 per cent it had stayed the same. Only seven per cent said the time had decreased.
NICC chief executive Ann McGregor said it was ‘alarming’ that so many businesses do nothing to protect their cashflow despite the worries.
“The Government must help educate businesses on how to manage late payment and bad debt. Businesses need to make sure they have suitable measures in place and work together with the government to ensure late payments become less endemic across the supply chain,” she said.
Poor cashflow has been a growing problem for businesses since the 2008 downturn, with many firms struggling to access working capital.
The NICC suggested measures such as a kitemark for prompt payers and better use of electronic-invoicing to help businesses.
Despite these issues, business confidence shows a slight positive change, with just under half (45 per cent) expecting to see an increase in turnover in the coming year and one quarter believing it will decrease.