The Irish economy could be losing as much as €7 billion a year due to poor business spending controls, new research has claimed.
The study, from Dublin-based automation platform Soldo, said the issues could be costing businesses up to 2 per cent of their annual revenue as over-centralisation led to slowdowns, excessive paperwork and poor visibility on spending.
It also found a lack of visibility around cashflow could impact businesses’ recovery in the wake of the pandemic. Poor visibility, over-spending and duplication of spend are helping to limit organisational growth, it said.
"Although many businesses in Ireland are struggling to manage cashflows in this exceptionally challenging economic landscape, we see that many are losing significant revenues on an annual basis simply through poor management of spending", said Patrick Hayes, CEO of Soldo Ireland. "Looking at this loss of revenue at a macro-level, the numbers are quite staggering."
The issue isn't limited to Ireland. The study estimated that European and UK economies lose around €347 billion a year through poor business spending controls, with businesses in Germany losing €62 billion a year, while France and Italy saw losses of €42 billion and €30 billion respectively. The UK economy lost an estimated £37 billion in 2020, the research claimed.
According to the study, 60 per cent of businesses cut costs during the pandemic, but now needed to speed up recovery and invest in their businesses to fuel that recovery.
The research also highlighted that more than €34 billion is lost each year in unclaimed VAT across the UK, France, Germany and Italy. Some €6.7 billion is lost due to errors in the way receipts are processed. “In the face of extraordinarily challenging trading environments, it is remarkable to see companies not claiming back money that is rightfully theirs which could be reinvested into company growth,” said Mr Hayes.
The report also showed the impact of Brexit, with 39 per cent of UK businesses estimating it would take two or more years for business to recover. Soldo was among the companies that have moved their European headquarters to Dublin due to Brexit.
