SMEs waiting 63 days to be paid, up from 60 in previous quarter.
Only 2.5% of SMEs charge interest on late payments.
80% have credit terms dictated to them by larger business.
84% of SMEs favour a mandatory 30 day payments regime with no opt-out.
Voluntary code on prompt payments ignored by big business.
ISME, Monday 30th June 2014.
ISME, the Irish Small & Medium Enterprises Association, at the launch of the SME Credit Watch Survey, today (30th June), has called on the Government to stop the charade of the ineffectual Late Payments legislation and take a much stronger hand in ensuring that SMEs in Ireland are paid on time. The Association highlighted the continued failure of the legislation as only 2.5% of SMEs feel they can charge interest on late payments, threatened by larger businesses who will stop dealing with them.
Speaking at the survey launch, ISME Chief Executive Mark Fielding stated; “This Government is forever spinning the yarn that they are “SME focused”, while their inaction on late payments would state the opposite. They allow big business and government agencies to continue to abuse their dominant position to contract out of the legislation. The figures prove it. The average credit period prior to legislation was 52 days; today it has deteriorated to 63 days”. The main findings from 826 respondents in the final week of June are:
Average payment period for SMEs in the second quarter of 2014 has deteriorated from 60 to 63 days.
28% are experiencing delays of 3 months or more, a deterioration on the 25% in Q1.
6% waiting over 120 days, up from 5% in the first quarter.
A net 16% of businesses are waiting longer (Q1, 2014 14%).
Late interest is charged by less than 2% of micro and small businesses, while 8% of medium sized businesses charge it.
Munster businesses wait longest, at 66 days, while Connaught is best at 51.
Distribution businesses wait on average 69 while Construction is shortest at 55 days.
84% of SMEs favour a statutory 30 day payments regime, with no opt out.
With 84% of SMEs favouring a mandatory 30 day payment, it is now up to the Government to amend the legislation. (On the assumption that all businesses, without exception, are obliged to pay within 30 days of end of month of invoice).
ISME proposes the introduction of a statutory 30 day payments regime for all business trading within Ireland with other Irish based enterprises, without exception. This could be introduced on a phased basis over 3 years, as follows:
Year 1 60 days.
Year 2 45 days.
Year 3 30 days.
“However, we do not have much hope that change will come as, even the attempt by the Department of Jobs, Enterprise & Innovation to improve matters through a “Fair Payment Charter” has collapsed due to lack of support from the big business and semi-state lobby group IBEC, as the abuse of their dominant position continues unabated,” continued Fielding. The Association called on the Minister for Jobs, Enterprise and Innovation to;
Introduce, publicise and champion a Fair Payment Charter for all businesses.
Insist on adherence to Fair Payment Charter as criterion for granting state contracts.
Begin the process of reducing the statutory payment days to 30.
Insist that state agencies, especially the HSE, adhere to the 15 day rule.
Insist on publication of payment data by state agencies as instructed.
Government should ‘name and shame’ those who pay SME businesses late.
“The ISME recommendations for a 30 day mandatory payment would allow all businesses to predict their cash flow, introduce a level playing field for all credit transactions, reduce reliance on bank finance and bring down the cost of doing business. This initiative would stop the abuse of dominance by large business and state agencies and allow indigenous small enterprises to survive and maintain and create jobs”, concluded Fielding.
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