Small firms get tough on late payers

Nearly a quarter of small businesses are unaware of their powers to penalise late payers by charging interest on outstanding payments, while less than 10% have actually used such powers, according to a new study.

The Late Payment in Commercial Transactions Act, which was amended by an EU Directive, was transposed into Irish law last March.

The new legislation allows firms automatically to charge interest penalties on accounts outstanding by 30 days or more. However, a survey of SMEs by the Small Firms Association shows that almost 25% of such companies are unaware of the legislation and of the majority that do know about it, only 8% have used it and just 4% have been successful in their efforts.