Calls for SME 30-day ‘regime’

Isme has called for a statutory 30-day business-to-business payments ‘regime’ to be introduced, stating that the current prompt payments legislation has failed to benefit SMEs since being introduced 12 years ago.

The latest Credit Watch Survey from the small firms lobby group, published this morning, shows that despite a slight improvement in the current quarter, Irish SMEs are still waiting an average of 60 days to be paid by customers. This has led the group to conclude that the current voluntary code on prompt payments is being ignored by big business.

The survey also shows that three-quarters of all SMEs have their credit terms dictated to them by larger business customers and that, despite legislation allowing them to do so, only 3% of SMEs charge interest on late payments.

Isme chief executive Mark Fielding said the data shows that small firms are being “abused” by their bigger business customers and proves that the current legislation is “a sick joke”.

“Big business continues to wax lyrical about their corporate social responsibility; speaking at Government-sponsored conferences and preaching to SMEs on the subject,” he said.

“But even the ‘soft’ option of a voluntary ‘fair pay charter’, in the action plan for jobs, is being ignored and stymied by big business, who delay legitimate payments to SMEs, placing them in jeopardy.”

Mr Fielding continued: “The facts are, since the legislation was introduced, SMEs are waiting longer to be paid, they are afraid to charge interest on late payments, and the abuse of dominant trading positions is flourishing, despite assertions to the contrary. While big business and government agencies are allowed to continue to abuse their dominant position, by ignoring or contracting out of the legislation, SMEs will continue to go to the wall.”

As well as the 30-day payment period, Isme wants all State agencies — especially the HSE — to adhere to the 15-day rule and Government to ‘name and shame’ those firms who pay SMEs late.

“The Government, through the collector general, insists on being paid on time; would that the same government stand up to big business and insist on prompt payments, the lack of which is placing many small businesses at risk, with resulting closures and job losses,” said Mr Fielding.