SMEs experience small improvement in receiving payments

Irish SMEs experienced a slight improvement in the number of days it takes for them to receive payment for their services, down from 59 days to 57 days, according to the Q2 2016 ISME Credit Watch Survey.

However, the Irish Small and Medium Enterprises Association (ISME) has warned that late payments are still causing cash flow issues for some small firms and demanded that the new administration prioritise this issue as a matter of urgency.

The vast majority (86 per cent) of SMEs surveyed said they would favour a 30-day statutory payments regime with no opt-out.

Mark Fielding, chief executive, ISME, said: “It is essential that all businesses and in particular small business be in a position to predict their cash flow with some degree of certainty.

“However, because of the abusive dominance of big business, cash flow across the SME sector is slow.

“This market failure is allowed to happen because of the complete lack of government intervention. This situation, coupled with the lack of available and affordable credit from the bailed out banks, is slowing the recovery of many small businesses.”

The Q2 2016 ISME Credit Watch Survey talked with 901 small firms in the last week of June and found that while the average payment period for SMEs was very slowly declining, almost one-in-five (17 per cent) of SMEs are still experiencing payment delays of three months or more.

The ISME called on the new administration to consider the following:

• Prioritise the review of the Prompt Payments legislation, which should be amended to assist rather than crucify the SME sector.
• Publicise, promote and champion the Fair Payment Code for all businesses.
• Insist on adherence to Fair Payment Charter as criterion for granting state contracts.
• Insist that all state agencies, including the HSE, adhere to the 15-day rule.
• Insist on publication of all payment data as instructed
• Government should ‘name and shame’ those who pay SMEs late.

“Late payments are not only damaging to SMEs but are highly inefficient from macroeconomic perspective, increasing costs, reducing investment and job creation,” added Fielding.

“Its impact on smaller business can be life-threatening and result in closures.

“The new Government must review the legislation which is aiding and abetting slow paying larger business to the detriment of SMEs across the country.”

Last updated: 5th July 2016