Tuesday, 21 January 2014
“Getting paid on time is a never ending problem for small businesses. Late payment causes serious cash flow problems; requires firms to extend overdraft facilities and consumes a great deal of management time.”Avine McNally, Acting Director, Small Firms Association.
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:
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:
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.
For further information and interviews, please contact: Avine McNally, Acting Director, SFA at Tel: 01 605 1633 (office) or 087 645 0205. Twitter: @SFA_Irl