There was a 28% rise in the number of SMEs enquiring about liquidation options in the last three months of 2022, according to a new survey by professional accountancy body ACCA.
The findings show there was a 30% increase in the number of businesses seeking support on how they can protect themselves against bad debt.
The survey sought the views of 250 financial auditors, on the current performance of businesses across a broad range of sectors.
According to ACCA, the findings reflect a challenging economic environment for SMEs who are being impacted by rising energy, labour, supply chain and borrowing costs.
When asked how businesses are managing increased costs, 44% said they were being passed onto customers, with 39% being absorbed into the business and a further 12% being offset through operational efficiencies.
"This survey, which has been conducted solely amongst auditors who assess and verify business performance and play a pivotal role in supporting SME growth, reflects an uncertain and complex operating environment for many small businesses," said Caitriona Allis, Head of ACCA Ireland.
"While there is optimism in the ability of the economy to weather the current storm, growth has stagnated in certain sectors driven in no small part by consistently high levels of inflation and rising costs, and this is resulting in more SMEs seeking to review their financial options and protect their assets," she added.
However, Ms Allis said indications that inflation has peaked is positive news for businesses.
"Hopefully SMEs that are struggling can start to see a more settled trading environment soon," she said.
She added that Government support remains "crucially important" to stem the challenging tide that many SMEs have been facing.
"The retention of energy credits after February for struggling businesses would go a long way to support those that are most at risk," she added.
