40% of SMEs wait 3 months for pay

State agencies and large companies are continuing to delay payments to SMEs, with the amount of small firms waiting for more than three months increasing to over 40% in the last quarter.

Fresh data from small firms lobby group Isme notes that the average payment period for SMEs is 69 days — unchanged in the third quarter of the year from the preceding three months, but still more than double the 30-day limit most companies are looking to be made mandatory.

Furthermore, 41% of small businesses are experiencing payment delays of three months or more — a figure which is up by 3% on the second quarter of the year. One bright note from Isme’s third-quarter credit watch, which was published yesterday, is that only 8% of SMEs are waiting for more than 120 days for payment, down from the 10% measured in June.

Isme chief executive Mark Fielding said: “The latest figures clearly show the effect that late payments are having on SMEs, caught in a vicious cycle of non-payment from large businesses and government agencies.

“While the main government departments have improved their payment days, the main offenders are the state agencies and big business, where delays continue to put massive pressure on SMEs.”

Isme is looking for an immediate government review and amendment of the Prompt Payments legislation, the introduction of a “fair payment charter”, an increase from €2,000 to €20,000 in the limits of the Small Claims Court, a 15-day payment rule for state agencies and for the Government to name and shame those who pay SMEs late.

“SMEs have to pay Vat to Government long before they themselves are paid, which is placing undue pressure on smaller businesses who are being let down by the bailed-out banks reducing overdrafts left, right and centre,” said Mr Fielding.

“The Government refuses to tackle the issue, as businesses go to the wall and jobs are lost because of totally inadequate legislation.”

The introduction of a statutory 30-day payments regime — for all businesses — could be phased in over a three-year period, Isme has also suggested.