Closures exceed new firms for first time in six years
Business closures exceeded the number of new company formations for first time since 2003 due to a dramatic increase in the number of voluntary liquidations and bank-appointed receiverships, new data showed yesterday.
The figures for January to June 2009 show that more companies went into voluntary liquidation in the first half of this year than at any time since data was first collected in 1998.
Financial information specialist Experian, who compiled the Irish figures, warned that companies needed to upgrade their information databases, using new tools such as payment performance records to give them early warnings on client firms that could end up generating bad debts.
The data shows that more companies were dissolved in the first half of this year than were registered at the Companies Registrations Office (CRO). A total of 6,691 companies were dissolved, compared to 6,627 registered with the CRO.
The number of new company registrations in the first half of 2009 fell by 20pc from the first half last year, down from 8,207 to 6,627.
Experian said there has been a dramatic increase in the number of bank-appointed receivers to companies in difficulty and the number of companies seeking protection from creditors by filing for examinership.
The figures showed there were 523 voluntary liquidations between January and June, with a further 79 companies placed in receivership. During all of 2008, 56 companies were placed in receivership. During the period, 53 companies filed for examinership, compared to 19 in the same period in 2008.
Jim Kennedy, head of operations at Experian Ireland, said the effects of the global recession continue to cut deeply into Irish business.
"In the current climate, cash is king," he said.
"Businesses that will emerge strongly from this recession are those that maintain excellent credit controls and use real-time data.
"It is no longer sufficient to rely on out-of-date company accounts. Newer tools such as payment performance data can be used to identify companies' payment patterns and worsening payment trends," he said.
"These are strong indicators of the cashflow in a business and will not only indicate whether a customer is likely to pay, but also when."