Late payments hit small firms

Small businesses are being hit by late payments, with some firms waiting more than three months to be paid.

The Irish Small & Medium Enterprises Association said its latest credit watch survey, which spoke to more than 600 people in the SME sector, revealed the extent of the problem, with companies failing to be paid on time by both large businesses and the State itself.

It warned small enterprises faced going out of business as a result of the delays, which was being exacerbated by a continuing lack of bank credit.

According to the survey, the average payment period has risen to 75 days from 50 days in 2002. Only 16 per cent of firms are paid within 30 days, and some 14 per cent are waiting more than 120 days to receive payment.

“The situation is continuously deteriorating as the delays have increased from 50 days at the introduction of Late Payments legislation to 60 days in Autumn of 2007 to the current excessive 75 days,” said Isme chief executive Mark Fielding.

“The main culprits are the large businesses who abuse their dominant position and take longer credit, thereby starting the domino effect down the supply chain”.

The group called for the Government to introduce a mandatory payment period that would guarantee all companies payment within 30 days from the end of month of invoice or delivery.

“The fact that so many small and medium companies are being forced to wait longer for payment shows, not only that the seven year old legislation is useless but that it actually ‘aids and abets’ larger entities in delaying payments; squeezing small business,” said Mr Fielding.