Survey: SME payment delays worsen

Credit conditions for SMEs are deteriorating, with the time it takes for firms to receive payments getting longer, according to ISME’s latest Credit Watch Survey.

The main findings from 826 respondents in the final week of June include: * Average payment period for SMEs in the second quarter of 2014 deteriorated from 60 to 63 days.

* 28% are experiencing delays of three months or more; a deterioration on the 25% in the first quarter.

* 6% are waiting over 120 days, up from 5% in the first quarter; and a net 16% of businesses are waiting longer compared with 14% in the first quarter.

* Late interest is charged by less than 2% of micro and small businesses, while 8% of medium-sized businesses charge it.

* Munster businesses wait longest, at 66 days, while Connaught is best at 51.

* Distribution businesses wait on average 69 days while construction is shortest at 55 days.

* 84% of SMEs favour a statutory 30-day payments regime, with no opt-out.

ISME chief executive Mark Fielding said: “This Government is forever spinning the yarn that they are ‘SME-focused’ while their inaction on late payments would state the opposite.

“They allow big business and Government agencies to continue to abuse their dominant position to contract out of the legislation. The figures prove it. The average credit period prior to legislation was 52 days; today it has deteriorated to 63 days.”

ISME proposes the introduction of a statutory 30- day payments regime for all business trading within Ireland with other Irish- based enterprises, without exception. This, they suggest, could be introduced on a phased basis over three years, with a maximum statutory payment period of 60 days in the first year, reduced to 45 days in the second year and 30 in the third year.