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Big businesses are 'the main culprits' in late payments

ISME praised the adoption of a voluntary code on prompt payments by SMEs – but says big business must be forced to agree to the code in order to improve the cash-flow of smaller operations.
Jul 1st 2013, 11:20 AM 3,843 6

WAITING TIMES FOR commercial payments among small and medium businesses (SMEs) slightly improved in the second quarter of this year, with the average number of days for SMEs waiting to be paid now standing at 66 – down from 67 in the previous quarter.

However, big business and some government agencies remain the “main culprits” for late payments, according to the Irish Small and Medium Enterprises Association (ISME).

ISME praised the recent adoption of a voluntary code on prompt payments by SMEs, but said that big business must be forced to agree to the code in order to improve the cash-flow of SMEs.

Speaking at the launch of the SME Credit Watch Survey, ISME chief executive Mark Fielding said that the results of survey were “somewhat encouraging” and the Code of Conduct should have a positive effect on cash flow for SMEs. “However, the fact that IBEC have refused to be involved in this Code initiative is a challenge to Government, as big businesses are the main culprits in late payments. Government must therefore bypass IBEC and exert pressure on the multinationals, large businesses and state agencies through the IDA and Enterprise Ireland.”

The survey, which included 1,132 respondents in the week ending 28 June, found that the average payment period for SMEs in the second quarter of 2013 has improved from 67 to 66 days – this is the shortest period recorded since Autumn 2008.

Thirty-six per cent of SMEs are experiencing delays of three months or more, compared with 35 per cent in the first quarter of this year. Ten per cent of businesses are waiting over 120 days for payment, a deterioration of the March figure of 8 per cent.

Businesses in Ulster were found to wait the longest for payment on average, at 68 days, while businesses in Connaught fared better on average at 60 days.

Distribution and wholesale businesses wait approximately 73–71 days, while manufacturing businesses waited just 66.

ISME said that while overall credit has improved, it was renewing its call for a strict statutory 30 day payment regime for all businesses trading within Ireland, to be phased in over 3 years – which it said should be supported by Taoiseach. “It is now time to listen to the 82 per cent of SMEs who favour a mandatory 30 day payment regime, with no exceptions, which could be introduced over three years,” Fielding said.

The proposed scheme would see targets over three years, with average waiting time of 60 days in year one; 45 days in year two; and 30 days in years three.

Read: ‘A blip has become a trend’ says retail group as sales drop
Read: Chambers Ireland: ‘Targeted rate cuts urgently needed for businesses’
Read: ‘Put her back in her box’: ISME slams Burton’s call to raise minimum wage

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Jennifer Wade

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