The results of the latest ISME business trends survey have been described as 'disastrous' and represent the worst reported figures in nearly all categories.
ISME, which represents small and medium businesses, says the survey for the fourth quarter of 2008 confirms that the indigenous sector is in crisis with sales and investment slumping, job losses exceeding its worst forecasts and export values down sharply.
Orders are being cancelled at unprecedented levels while business confidence is at an all time low, it adds.
The survey, which looked at 600 firms, confirms that the first quarter of 2009 threatens to be calamitous with an even greater upsurge in job losses expected.
ISME's survey reveals that 79% of businesses are less optimistic about their prospects compared to a year ago. The most negative sector is the distribution sector, followed by manufacturing, construction, retail and services.
It shows that 47% - a record high - of businesses employed fewer people in the fourth quarter of 2008 compared to the same time last year. Only 13% had a bigger workforce. The construction sector recorded the biggest rise in job losses with a massive 73% of firms employing less than this time last year.
Employment prospects are also very pessimistic with 51% of firms expecting to let people go and only 14% expecting their headcounts to increase next year. Again the construction and manufacturing sectors are most negative about their employment prospects in 2009.
The survey also shows that sales have dramatically slumped in the last three months, with 61% of companies reporting that their turnover is down in the last 12 months. 21% have reported an increase.
A huge 73% of companies said that their sales and order books are down in comparison to last year, up from 55% in the previous quarter. 49% of firms have also experienced cancellations of orders in the last three months.
ISME says that late payment is a serious issue for small and medium sized businesses and is getting worse. The survey confirms that 55% of respondents said that the credit period being taken is getting longer compared to the same time last year. 39% of firms have to wait over 90 days to be paid.
The unwillingness of the banks to provide credit facilities to many businesses is only exacerbating an already bad situation, ISME says.
ISME's head of research Jim Curran says that while the sharp downturn over the last number of months was unprecedented, unfortunately the indicators are that things are going to get worse before they get better.
He said that ISME is extremely concerned for the future of many SMEs and predicts that there will be a big increase in job losses and company closures, especially in the first part of 2009.
In order to save jobs and businesses, Mr Curran says the Government should suspend the terms of the national pay deal and freeze all local charges on businesses for 2009.
He also wants it to keep pressure on the banks to extend credit facilities to their customers on favourable terms and keep plans for the National Development Plan on track.
ISME also urges the issue of late payments by introducing mandatory payment terms of 30 days in the private sector - with no exceptions.
