Almost half of all business managers have had to lay off workers because customers do not pay their bills on time or at all.
A Europe-wide survey also found another 60pc of bosses in Ireland cannot hire new employees because of the growing amount of invoices left unpaid for weeks or even months.
The study raises concerns over the rate of economic recovery across the eurozone, with 46pc of European business managers predicting increased risks of late payments in the coming 12 months, according to Intrum Justitia’s European payment index.
The figure soared to 57pc in Ireland.
“Business managers in Germany, France, Spain and Poland are more pessimistic than they have been in five years,” it added.
The survey was conducted by the credit management services firm in 31 European countries between January and March, with more than 10,000 companies responding.
In Ireland, the amount of bad debt companies are writing off has risen to 3.7pc, while 74pc of managers are less confident about getting the financial support for their bank.
The survey revealed all customers – consumer, business and public authorities – are late paying bills, taking an average 34, 59 and 44 days respectively.
A quarter were not paid for more than 90 days.
Almost six out of 10 business managers also believe their company is at risk of more customers defaulting over the next 12 months.
Gerry Barrett, sales director of Intrum Justitia in UK and Ireland, claimed small-to-medium enterprises (SMEs) were driving the problem.
“The big multinationals are paying up,” he said.
“People are telling us it’s the SMEs that are not paying each other.”
The study also examined how risky a country is to do business with and found Ireland – which recorded 161 points – had to urgently enhance its risk reduction measures, like implementing legislation to make people pay up on time.
Nordic countries such as Denmark, Norway and Sweden are low-risk countries for credit managers and few claim that those risks are likely to increase.
The highest risk forecasts were mainly expressed in Europe’s bailed-out nations like Portugal, where 82pc of managers predict that the risk for late payments will increase during 2014. There were also high numbers for Greece (74pc), Romania (73pc), Spain (65pc) and Italy (65pc).