Late payments from state agencies affecting SMEs, insists ISME

Late payments from state agencies affecting SMEs, insists ISME

Mark Fielding of ISME

A new survey from ISME shows that 40% of small and medium sized businesses experienced delays of three months or more to receive payments for goods and services sold during the fourth quarter. This compares to 42% in the previous quarter.

The ISME credit watch survey for Autumn 2011 shows the actual average payment period in Ireland for SMEs is 71 days, a slight improvement on the previous quarter’s figure of 72.

The research, which surveyed 626 companies, also showed that both big businesses and state agencies continue to increase the credit taken.

It also reveals that businesses in Connacht and Ulster wait the longest to be paid – 80 and 85 days respectively, while Dublin is the best at 68 days. Distribution and transport businesses wait on average 77 days to get paid, while wholesalers are paid on average in 62 days.

ISME states that state agencies and the HSE in particular are simply ignoring the instructions from the Minister for Jobs, Enterprise and Innovation to pay all invoices within 15 days. This leaves small businesses short of promised payments with which to pay their own suppliers.

”In some cases we have examples of hospitals demanding even longer payment dates, blatantly abusing their dominant position and totally in contravention of the Minister’s instructions,’ commented ISME’s chief executive Mark Fielding.

He said that small businesses are closing down, not due to lack of profits, but lack of cash, as the banks are not lending to cover the shortfall in cash flow.

The Association has urged the Minister to insist that state agencies adhere to the 15 day rule and says the Government should ”name and shame” those who are late when it comes to pay small and medium sized businesses.

”With late payments across the board, cash flow in the entire sector is drying up and this, coupled with the lack of available and affordable credit from the rescued banks, is putting many small businesses at risk, with the resulting threat of closures and job losses,” Mark Fielding added.

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