Neil Hughes Examiner states uptake on examinership slows

Neil Hughes Examiner states uptake on examinership slows

By |2015-10-07T18:00:46+00:00October 7th, 2015|Current Developments, Examinership News|

UPTAKE ON EXAMINERSHIP SLOWS BUT CHALLENGES REMAIN FOR MANY SMES

Hughes Blake SME Examinership Index Reveals 168 Jobs Saved in Small and Medium Businesses in Q3

SME Recovery Must Take Priority in Upcoming Budget – Neil Hughes Examiner at Hughes Blake

New data from the Hughes Blake SME Examinership Index released today reveals that uptake on the mechanism has slowed as the economy has steadily improved over the first three quarters of the year. The improving state of the economy is reflected in the falling number of SME jobs saved by the process to date this year, which stands at 871 versus 1,089 between January and September in 2014  – a decline of 20%.

The Index reveals that a total of 168 jobs were saved in small and medium businesses in Q3 through examinership.

Neil Hughes, Examiner at Hughes Blake, noted that the decline in usage of the process was a positive sign for the economy overall. However, ahead of Budget 2016, he cautioned that more supports are needed if a widespread recovery is to take hold among SMEs.

“Throughout the recession, the examinership process came to be used more and more by small and medium businesses who relied on it for a second chance at survival. However, in the course of 2015, as the economy has improved, we have seen a distinct decline in the number of SMEs moving through the process, with the number of jobs saved in those firms falling by 20% compared with last year. On the face of it that’s a positive development, but pro-active measures are needed if we are to ensure that small and medium businesses don’t just survive, but are in a position to thrive.

“At Hughes Blake, we encounter a lot of owner managers who tell us that they have not made the investments their companies need in terms of staffing and other critical resources, owing to severe restrictions in access to finance over the last number of years. As a result, today they are not in a position to scale, important skills are being lost and staff are overburdened after years of doing more with less. While the economy is certainly improving, challenges remain for many businesses which must be substantively addressed if they are to rebound at their full potential and become job creators,” said Mr Hughes.

Mr Hughes also flagged the dependency of many troubled SMEs on low interest rates, and identified the impact that will be felt when they inevitably rise.

“There are also the firms with legacy debts and high rents which have managed to stay in business thanks to the lifeline provided by low interest rates. Looking to the future, it is not a question of if these rates will move back up, but when. And when it does happen, SMEs with fundamental issues such as these will be faced with insolvency and we, as a country, need to put in a plan in place to ensure that as many of those companies as possible are saved. As the conversation shifts towards recovery, it’s not clear that the awareness is there of the potential this sleeping problem holds to undo the progress we are now seeing. At Hughes Blake we are keen to see all stakeholders work to promote greater awareness of this threat and to share in finding the solution. And, there is no doubt that examinership should be a key tool that is utilised when the moment comes,” he concluded.

 

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Accounting, audit, tax and consulting – the life of your business. Hughes Blake is the Republic of Ireland representative of Integra International, a global association of independent accounting firms.