Eight companies a day failed during February

By Geoff Percival - Thursday, March 01, 2012

More than 200 companies went to the wall in February, equating to an average of eight business failures per day.

The figure also suggests that more companies could be in danger of failing this year compared to last.

Latest monthly data from business intelligence service, Vision-net, said that the 206 instances of companies collapsing — either entering receivership, examinership or being liquidated — was up by 16% on a year-on-year basis. The central figure for February is also well up on the average failure rate for 2011 of 170 per month. That said, January actually saw a 19% year-on-year fall in failures, with 121 companies collapsing that month.

However, the latest figures also show a 9% drop in the number of business start-ups in February; and 53% of companies stress-tested by Vision-net being deemed "high risk" or in danger of collapse. According to Vision-net managing director, Christine Cullen, the biggest cause of failures is poor cash flow, "meaning that businesses are not running out of customers, but rather out of money."

"The Government — through the Credit Review Office — must continue to pressure the banks to lend to viable businesses which, in turn, should gather proper market intelligence to enable them to make informed business decisions, avoid risks, and manage their way through a volatile trading environment," she added.

Of the 206 companies falling into trouble last month, 49% went into receivership, with the same percentage being liquidated and the remainder having an examiner appointed.

The construction sector was the most vulnerable for failing companies, but although visitor numbers to Ireland are up, the hospitality sector is also suffering, with three out of five hotels and restaurants on the brink of collapse.

"The major jobs announcements by Eli Lilly and PayPal, the landmark trade deal with China, continued buoyancy in the export and tourism sectors and strong start-up rate for Irish firms are positive signs for our economy — but, clearly, the rate of business failure remains alarmingly high as companies struggle to access credit and consumer demand remains weak," Ms Cullen added.


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