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Wednesday 29 November 2023 Dublin: 2°C
Money Money Money

One in 10 small businesses use debt collection agents to get money owed

Small businesses are having to wait an average of 62 days to get paid by creditors.

SMALL BUSINESSES ARE having to wait an average of 62 days to get paid by creditors – despite the fact that the majority ask to be paid within 30 days.

The Small Firms Association said getting paid on time is a “never ending problem” for most small and medium businesses.

A survey of SMEs found that 11 per cent have used debt collection agents to get slow paying customers to cough up cash. Another 8 per cent have started using late payment charges for people who don’t pay on time.

“Late payment causes serious cash flow problems, requires firms to extend overdraft facilities and consumes a great deal of management time,” said Avine McNally of the Small Firms Association. “This in turn affects the ability of the business to compete, be profitable and grow.”

Recent legislation means companies are now allowed to automatically charge financial penalties for people who don’t pay on time, but the majority of firms said they were reluctant to charge the penalty for fear of losing business.

Of the firms who knew about the legislation, 58 per cent said they worried about losing customers while 64 per cent said the creditor was too big to challenge. Another 69 per cent said they were concerned about getting a reputation for being a difficult supplier.

Read: Banks loaned just €3 million to scientific research SMEs since 2010 >

Read: Majority of SMEs who requested credit from banks were approved >

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