PROMPT payments legislation forcing government agencies and big business to pay small businesses is required urgently to prevent hundreds of firms from going out of business.
The ISME Credit Watch Survey for summer 2010 shows smaller enterprises are being placed under severe pressure by deliberately delayed payments from government agencies and big business.
ISME chief executive Mark Fielding said despite continuous warnings and corroborating quarterly statistics from the association, the Government refuses to tackle this issue as businesses and jobs go to the wall as a result of totally inadequate legislation.
“When smaller businesses are not being paid on time, they cannot in turn pay their suppliers and the vicious circle ends with the smallest and most vulnerable being forced to close down. This abuse of a dominant position by big business and state agencies has been allowed to continue under the very noses of successive ministers. The law, in this case, does the exact opposite to what was intended, in allowing powerful customers to dictate unreasonable credit terms to their smaller suppliers,” he added.
The main findings from in the 600 plus respondents are:
* Payment period in Ireland for SMEs is 76 days.
* Some 48% are experiencing delays of three months or more.
* Almost one in five (18%) waiting more than 120 days, the highest on record.
* Construction firms are waiting a massive 95 days, while wholesale is shortest at 65 days.
Mr Fielding said that while the main government departments have improved their payments, the real offenders are the state agencies and big business where delays have increased dramatically since the first quarter of this year.
“With the deterioration in late payments across the board, cash flow in the entire sector is drying up and this, coupled with the lack of available, affordable credit from the banks, is putting many small businesses at risk,” he said.
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