- Average payment in Ireland remains at 62 days
The Acting Director of the Small Firms Association (SFA), Avine McNally has said that late payments in Ireland are compounding a difficult financial environment for many small firms. With the average payment in Ireland taking 62 days.
"Getting paid on time is a never ending problem for most small businesses. Late payment causes serious cash flow problems; requires firms to extend overdraft facilities and consumes a great deal of management time. This in turn affects the ability of the business to compete, be profitable and grow."
The SFA released the findings of its Late Payment Survey, which was conducted at the end of November and shows:
- 56% of small firms offer credit terms of 30 days or less
- 71% of companies experience late payments on their credit tems, (an increase of 3% on January 2013)
- Payment Terms: 52% of companies have a written contract on payment terms with their customers (an increase of 4% on January 2013). 44% carry out credit checks on new customers.
- Payment History: 69% review payment performance of customers and 58% give credit more selectively based on this.
- Payment Processing: Just 10% use debt collection agents and 8% include late payment charges to slow paying customers.
The Late Payment in Commercial Transactions which was amended by an EU Directive was transposed into Irish law in March 2013. This legislation allows companies to automatically charge interest penalties on accounts outstanding beyond 30 days.
Nearly 1 in 4 respondents were unaware of the legislation and just 8% have used the legislation to get payment.
73% of respondents who were aware of the legislation choose not to apply the interest penalty. The reasons for this vary:
- 59% of firms are reluctant for fear of losing business;
- 61% are reluctant because the customer is too big to challenge;
- 67% have concerns of gaining a reputation as being a difficult supplier.
McNally highlighted that a frustration for many firms is if they are unsuccessful in gaining payment through the late payment legislation, they must pursue the outstanding debts through the court system. “Irish companies have problems gaining access to court due to administrative backlogs, the lengthy delays in setting up court dates and the costs.”
McNally called on the introduction of a cost-effective enforcement mechanism through the extension of the remit of the Small Claims Court for business debts up to €15,000 and for significant efforts to be made to change the late payment culture through the extension of the voluntary 15-day payment period to all Government Agencies including the HSE.
Acting Director SFA
84-86 Lower Baggot Street, Dublin 2
T: +353 1 605 1633
F: +353 1 638 1633
M: +353 87 645 0205
W: http://www.sfa.ie, http://www.sfa.ie/awards, http://www.betterbusiness.ie