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You are > Home > Connacht debtors best at paying bills
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Wednesday, July 14, 2010
Connacht debtors best at paying bills
Late payments are placing thousands of enterprises across the country in jeopardy, writes David Dwane.
That’s according to the ISME Credit Watch Survey for summer 2010.
Almost one in five small and medium size enterprises are waiting over 120 days for payment, the highest on record.
But Connacht is the best region, at just 63 days on average.
According to ISME, the representative organisation for small business, the survey shows clearly that smaller enterprises are being placed under severe pressure by deliberately delayed payments from government agencies and big business.
“Despite continuous warnings and corroborating quarterly statistics from the Association the Government refuses to tackle this issue as businesses and jobs go to the wall as a result of totally inadequate legislation,” said an ISME statement.
As in previous payment surveys, the summer 2010 report demonstrates that SMEs are particularly hard hit by late payments. They are more vulnerable to variations in cash flow, they often rely on a limited number of customers, and they are frequently suppliers to large accountancy-led businesses and state agencies that are known to delay payments to a greater extent than smaller enterprises do, said the organisation.
Commenting on the deteriorating situation ISME Chief Executive, Mark Fielding, said: “When smaller businesses are not being paid on time, they cannot in turn pay their suppliers and the vicious circle ends with the smallest and most vulnerable being forced to close down. “This abuse of a dominant position by big business and state agencies has been allowed to continue under the very noses of successive ministers. The law, in this case, does the exact opposite to what was intended, in allowing powerful customers to dictate unreasonable credit terms to their smaller suppliers”.
The main findings from in excess of 600 respondents are:
* The actual average payment period in Ireland for SMEs is 76 days.
* 48% are experiencing delays of three months or more.
* Almost one in five (18%) are waiting over 120 days, the highest on record.
* Both big business and state agencies continue to increase the credit taken.
* Small business waits 77 days on average while medium firms are paid in 67 days.
* Construction firms are waiting a massive 95 days, while wholesale is shortest at 65 days.
“The latest figures aptly demonstrate the effect that late payments are having on SMEs, in that the main victims are small businesses caught in a cycle of non-payment.
“While the main government departments have improved their payments, the real offenders are the state agencies and big business where delays have increased dramatically since the first quarter of this year.
“The fact that the banks are refusing normal access to credit for SMEs in their own pursuit of ‘self-preservation at all costs’, means that the indigenous small enterprises are genuinely struggling to survive, despite the fact that they are viable, although vulnerable. With the deterioration in late payments across the board, cash flow in the entire sector is drying up and this, coupled with the lack of available, affordable credit from the banks, is putting many small businesses at risk, with the resulting threat of closures and job losses,” continued Mr. Fielding.
ISME called on the new Minister for Enterprise, Trade and Innovation to issue a directive to all state agencies to pay their bills within 15 days.
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