More than a quarter of Ireland’s small to medium-sized enterprises (SMEs) have to wait three months or more to be paid by clients, a survey suggests.
The average payment period for SMEs has deteriorated to 63 days from 60, according to lobby group the Irish Small and Medium Enterprises Association (ISME). Many of Ireland’s smaller business have lobbied for a mandatory 30-day payment period.
ISME’s chief executive, Mark Fielding, said the survey findings belie the Irish government’s claims to be SME-focused aren’t true, despite the introduction of the Late Payment of Commercial Debts (Interest) Act in EU member states back in 2002.
“They allow big business and government agencies to continue to abuse their dominant position to contract out of the legislation,” he said. “The figures prove it. The average credit period prior to legislation was 52 days; today it has deteriorated to 63 days.”
ISME, which surveyed 826 businesses, reports that only 2.5% of SMEs feel that they can charge interest on late payments as they feel threatened by larger businesses and fear they may lose contracts.
Other key findings include:
- In the second quarter of 2014, 28% of Irish SMEs surveyed reported experiencing delays of three months or more, a deterioration on the 25% in Q114, while 6% are waiting more than 120 days, against 5% in Q1.
- Late interest is charged by less than 2% of micro and small businesses, while 8% of medium sized businesses charge.
- Businesses located in the province of Munster average the longest wait for payment, at 66 days, while Connacht is shortest at 51.
- A statutory 30-day payments regime, with no opt out, is favoured by 84% of SMEs.
ISME supports the introduction of a statutory 30-day payments regime for all business trading within Ireland with other Irish-based enterprises, without exception. It is also lobbying for a fair payment charter for all businesses, which would be mandatory when state contracts were being awarded.
“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,” added Fielding.
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