Corporate Advisory Department in Baker
Tilly.
• Interest rate hikes (after 14 years of record low rates);
• Spiralling inflation.
Spiralling inflation in Ireland (9.1% to July 2022 according to the CSO CPI1) has resulted in swift action from the European Central Bank which is forecasting two further interest rate jumps in 2022, coming at a time that many can least afford it.
This will have the effect of reducing free cashflow within businesses and, whatever buffer that may have been in place to deal with Revenue and other trade debts, will instead face renewed pressure to address bank debt repayments (and increased interest payments thereon).
For many, balancing income and outgoings on their own has been a challenge. We know from our
experience of assisting construction companies in difficulty that many of them would routinely have aged creditors that they had been carrying from even prior to the pandemic. Many would also have warehoused tax liabilities when that was available to them.
See PDF of the full article at Options for Struggling SMEs