A total of 29pc of respondents in the country said they planned to axe their company's Christmas party, according to the Close Brothers Business Barometer.
A further 26pc said that they would go ahead with their party but would plan something much more modest this year.
Of the companies planning to go ahead with a party, 58pc stated that staff would have to contribute to the cost.
More than a third of SMEs surveyed said that trading conditions for their business have deteriorated over the past 12 months and this impacted heavily on spending decisions for staff.
Harry Parkinson, managing director of Close Brothers Commercial Finance (Ireland) said that it would appear that many businesses are still in "austerity mode".
He said SMEs struggled to cope with paying for parties, wages and overheads, as well as having to close for a few days.