ISME, the Irish Small & Medium Enterprises Association, has warned that smaller enterprises are being placed under severe pressure by deliberately delayed payments. They say that the Summer SME Credit Watch Survey, released today has shown shows the disastrous predicament in which vulnerable SME businesses are finding themselves, due to lack of normal payments for goods and services.
Three quarters of respondents favoured a mandatory 30 day payment period. (on the assumption that ALL businesses are obliged to pay within 30 days of end of month of invoice. NO EXCEPTIONS), with 13% – ‘Don’t know’. When the “Don’t knows” were excluded a massive 84% were in favour.
The main findings from 700 respondents in the week ending 22nd June are:
- 84% of SMEs favour a statutory 30 day payments regime, with no opt out.
- Actual average payment period in Ireland for SMEs is 69 days, a slight improvement on the previous quarter at 71 days.
- 38% are experiencing delays of 3 months or more, (Q1, 2012 40%).
- 10% waiting over 120 days, a small improvement on the March figures at 12%.
- A net 32% of businesses are waiting longer, (Q1, 2012 35%).
- Both big business and state agencies continue to increase the credit taken.
- Ulster 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 Association called on the Minister for Jobs, Enterprise and Innovation to;- Prioritise the review of the 10 year old Prompt Payments legislation, which should be amended to assist rather than crucify the SME sector.
- Begin the process of reducing the statutory payment days to 30, as per the ISME proposal.
- Introduce, publicise and champion a Fair Payment Charter for all businesses.
- Insist on adherence to Fair Payment Charter as criterion for granting state contracts.
- Insist that state agencies adhere to the 15 day rule.
- Insist on publication of payment data as instructed.
- Government should ‘name and shame’ those who pay SME businesses late.
- Increase the limits of the Small Claims Court to €20k, from the current paltry €2k.
CEO of ISME, Mark Fielding, said that “The abuse of dominance by large business and state agencies must be stopped and the fact that the banks are refusing normal access to credit for SMEs, means that the indigenous small enterprises are genuinely struggling to survive, despite the fact that they are viable, although vulnerable. The ISME recommendations, which would allow all businesses to predict their cash flow, introduce a level playing field for all credit transactions, reduce reliance on bank finance and bring down the cost of doing business, should be introduced by Government.”