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07/01/2013

SFA Publish Late Payments Survey

Small Firms Association (SFA) is calling for establishment of Small Claims Court for Business, voluntary prompt payment code and awareness campaign.

"Significant efforts must be made to change the late payment culture through the introduction of a Voluntary Private Sector Prompt Payment Charter; the extension of the voluntary 15-day payment period to all Government Agencies including the HSE; and the introduction of a cost-effective enforcement mechanism through the extension of the remit of the Small Claims Court for business debts up to €5,000," Patricia Callan, Director, SFA.

The Director of the Small Firms Association (SFA), Patricia Callan, has said that late payments in Ireland are compounding an already difficult financial environment for many small firms. "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 or engage in additional borrowing and consumes a great deal of management time. This in turn affects the ability of the business to compete, be profitable and expand," commented Callan.

The Small Firms Association today released the findings of its 'Late Payment Survey', which showed that:

• 57% of small firms offer credit terms of 30 days or less

• 68% of companies experience late payments on their credit terms

• Average Payment Days in Ireland is 62

• Payment Terms: 46% of companies have a written contract on payment terms with their customers; but only 24% include late payment charges in this. 43% carry out credit checks on new customers.

• Payment History: 67% review payment performance of customers and 58% give credit more selectively based on this.

• Payment Processing: Just 11% use debt collection agents and 8% include late payment charges to slow paying customers.

Despite the introduction in 2002, of the EU Directive on Late Payment in Commercial Transactions Regulations, which allows companies to automatically charge interest penalties on accounts outstanding beyond 30 days, following the date of receipt of invoice, or of goods or services, the average payment period in Ireland is still very high at 62 days. 40% of respondents were unaware of the current late payment legislation. Just 9% have used the legislation to get prompt payment, and of those, just 4% have been successful.

A new EU Directive is due to be transposed into Irish law in March 2013.

(CD/GK)

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