Irish SMEs waiting more than two months to be paid

Late payments in Ireland are "compounding" a difficult financial environment for small businesses, with firms increasingly having to wait for longer than two months to be paid, the Small Firms’ Association (SFA) has claimed.
 
The SFA revealed 70 per cent of its members now have to wait at least a month to be paid; up two per cent on the start of 2013, with businesses waiting 62 days on average for standard payment.
 
Despite the serious knock-on effect of late payments for SMEs, resulting in major cash flow issues, only 11 per cent of firms said they had used debt-collection agents, while just eight per cent charge customers interest for missing payments.
 
Avine McNally, acting managing director for the SFA, said: "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."
 
Ireland’s small firms additionally cited concerns about losing future business and being perceived as "difficult" to deal with as a result of potentially pushy debt-collection and missing payment protocols.
 
The Government brought in new late payment legislation earlier this year, however, nearly 25 per cent of small firms questioned said they were unaware of the law with just eight per cent having used it to get payment.
 
Ms McNally said that if small firms are unsuccessful in using the new legislation they must pursue the outstanding debts through the courts. However, the courts can often be backlogged and difficult and expensive to access.

Date published 27 Aug 2013 | Last updated 27 Aug 2013