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Late payment waiting times down

Published 13/07/2015

The figures were welcomed by analysts
The figures were welcomed by analysts

Waiting times for late payments have reduced this year, small firms claim.

The average payment period has dropped to 58 days - slightly better than the 60 days during the first quarter of 2015 and 62 days last year.

But, the Irish Small and Medium Enterprise Association (ISME) said more must be done to improve credit behaviour.

Mark Fielding, ISME chief executive said: "While it is encouraging that the late payments are reducing, this has more got to do with better trading conditions than any great change in culture, especially among state agencies and big business."

The ISME credit watch survey also found fewer (21%) small businesses were experiencing delays of three months - down on the 25% earlier this year and 30% in the final quarter of 2013.

Around 4% of firms have to wait 120 days or longer.

The ISME has slammed current prompt payment legislation as "useless" and said only 2% of small and 4% of medium companies felt able to charge interest on late payments.

Mr Fielding added: "The fact that SMEs are unable to charge interest on late payments clearly shows the weakness of legislation and the dominant strength of big business when it comes to supplier payments.

"In an ideal world all business would adhere to agreed credit terms. This ideal world, of course, is very far removed from the reality of business. Smaller businesses, in particular, face significant financial constraints and arranging a new facility can take between one and six months - making late payment much more than simply a 'cost of doing business'.

"The reach of alternative finance, including invoice finance is growing fast, but has still a limited footprint in Ireland."

More than 1,000 firms responded to the ISME survey carried out last week.

Figures revealed that companies based in Munster waited longest for late payments at 62 days, with construction identified as the slowest sector at 70 days' wait.

SMEs in Connaught received swiftest payments at 50 days while the wholesale industry was deemed fastest at 46 days.

ISME has called for the government to introduce statutory 30-day payment regime, with no opt-out.

Mr Fielding said: " Late payments in Ireland is a product of industry hierarchies and market power, condoned by government for decades, leading to SMEs suffering.

"For big business it is the cheapest form of credit at zero cost, gained by the threat of withdrawal of future business. This abuse of a dominant position can only be rectified by government intervention."

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