DETERIORATION IN PAYMENTS TO SMEs

ISME, 30^th March 2016.

• Credit days have increased to 59 days on average.
• Big Business slipping back into old ways.
• 86% of SMEs favour a statutory 30 day payments regime; with no opt out.
• Lack of Government intervention putting business and jobs at risk.
• Voluntary code of conduct needs promotion by Government.  

The ISME Credit Watch Survey for the first quarter of 2016, was launched today (30^th March), showing an increase in payment days to 59 days, four days worse than previous quarter. The Association warned that late payments are continuing to cause liquidity issues for some SMEs and demanded that the new administration prioritise this issue.

ISME Chief Executive Mark Fielding commented, “The vital cash-flow for small and medium enterprises is being hampered by late payments from big business and state agencies. While this fact has been acknowledged in the Governments Action Plan for Jobs, nothing has been done to improve the situation and once more the SME sector is ‘thrown to the wolves’. The introduction of the Fair Payments Charter is but a fig leaf to cover the inability of Government to do anything to rectify the deteriorating situation, as accountancy led big business simply ignore it”.

The main findings from 1,080 respondents in the final week of March are:

• Average payment period for SMEs in the first quarter of 2016 has increased by 3 days to 59.
• 24% of SMEs are experiencing delays of 3 months or more, up from 15% in Q4, 2015.
• 4% waiting 120 days and over, similar to Q4 of 2015.
• Late interest is charged by 1% of SMEs, while only 4% of medium sized businesses charge it.
• Ulster businesses wait longest, at 67 days, with Munster best at 52 days.
• Distribution is waiting an average of 63 days, while Wholesale and Construction wait 56.
• 86% of SMEs favour a statutory 30 day payments regime; with no opt out, an increase from 79% in Q4, 2015.

The Association called on the new administration to;

• Prioritise the review of the Prompt Payments legislation, which should be amended to assist rather than crucify the SME sector.
• Publicise, promote and champion the Fair Payment Code for all businesses.
• Insist on adherence to Fair Payment Charter as criterion for granting state contracts.
• Insist that all state agencies, including the HSE, adhere to the 15 day rule.
• Insist on publication of all payment data as instructed.
• Government should ‘name and shame’ those who pay SME businesses late.

“It is essential that all businesses and in particular small business be in a position to predict their cash flow with some degree certainty. However, because of the abusive dominance of big business, cash flow across the entire SME sector is, once again, beginning to dry up. This market failure is allowed to happen because of the complete lack of government intervention. This situation, coupled with the lack of available and affordable credit from the bailed out banks, is once again putting many small businesses at risk, with the resulting threat of closures and job losses,” concluded Fielding.

 

	SPRING ‘15	SUMMER '15	AUTUMN '15	WINTER '15	SPRING '16
	DAYS	DAYS	DAYS	DAYS	DAYS
DUBLIN	63	58	59	61	61
LEINSTER	61	54	53	52	57
MUNSTER	64	62	54	56	52
CONNAUGHT	50	50	57	54	59
ULSTER	63	57	56	55	67
TOTALS	62	58	55	56	59
MANUFACTURING	61	57	58	62	61
SERVICES	63	59	58	59	61
DISTRIBUTION	64	66	56	63	63
WHOLESALE	53	46	50	44	56
CONSTRUCTION	69	70	56	53	56
HOSPITALITY	54	60	53	53	46

 

 

 

 

 

 

 

 

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