Firms say payment laws killing business
25 June 2012
Firms say payment laws killing business
utdated prompt payments laws are killing firms with smaller enterprises being placed under severe pressure by deliberately delayed payments, according to lobby group, ISME today.
Calling for a mandatory 30-day payment on invoices, its Summer SME Credit Watch Survey, rele shows what it says is the "disastrous predicament" in which vulnerable SME businesses are finding themselves due to lack of normal payments for goods and services.
The current government refuses to tackle this issue, as businesses go to the wall and jobs are lost because of totally inadequate legislation, ISME said.
The survey found that 84pc of respondents favoured a mandatory 30-day payment deadline.
According to ISME Chief Executive, Mark Fielding, "the latest figures aptly demonstrate the effect that late payments are having on SMEs, in that the main victims are small businesses, caught in vicious cycle of non-payment. While the main government departments have improved their payment days, the main offenders are the state agencies and big business where delays continue to put massive pressure on SMEs".
"If this government is serious about helping small and medium businesses, then an immediate change to the current legislation is required to discard the 'opt out' clause used by big business and, over a period of time, create a level playing field. Only then will SMEs improve their cash flow, thereby reducing their need for bank loans".
The survey also found that the actual average payment period in Ireland for SMEs is 69 days, a slight improvement on the previous quarter at 71 days while 38pc are experiencing delays of 3 months or more, (Q1, 2012 40pc).
It found that 10pc of firms are waiting over 120 days, a small improvement on the March figures at 12pc. And that a net 32pc of businesses are waiting longer, (Q1, 2012 35pc).
Both big business and state agencies continue to increase the credit taken.
lster businesses wait longest, at 78 days, while Dublin remains the best at 66 days.
Construction and Distribution businesses wait on average 73 days while Services continue to improve at 66 days.
"The Government's Action Plan for Jobs is very weak on any proposals to improve the situation as they bend under pressure to maintain the status quo from the big business lobby group IBEC, favouring the accountancy driven large businesses, and allowing them to dictate credit terms to their smaller suppliers," it said.
"ISME proposes the introduction of a statutory 30 day payments regime for all business without exception."
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