SMALL BUSINESSES are now waiting an average of 71 days for payment, the independent business organisation, Isme, has claimed.
Chief executive Mark Fielding said Government agencies and accountancy-driven big businesses were terrorising smaller suppliers with “take it or leave it” demands.
“This amounts to an interest-free loan, which small and medium businesses are obliged to give to their larger and economically stronger customers,” he added.
“The result of this is that the smaller businesses are closing down, not due to lack of profits but lack of cash, as the State-rescued banks are not lending to cover the shortfall in cash flow.”
Publishing its autumn credit watch survey, Isme called on the Government to insist that State agencies adhere to the 15-day payment rule while naming and shaming those responsible for paying late. It said late payments were a major cause of small business closures, with 40 per cent of companies experiencing delays of three months and more.
A lack of workable prompt payments legislation was killing small business, it claimed, adding that the HSE was “blatantly ignoring’’ Government instructions on the issue.
“Big business continues to deliberately delay payments,” it added.
The findings, based on 626 respondents, found that Connacht and Ulster businesses had to wait longest, an average of 80 to 85 days, while Dublin, averaging 68 days, was the lowest.
Distribution and transport businesses waited an average of 77 days, while the delay was 62 days in the case of wholesalers.
Isme has called on the Government to prioritise the review of the prompt payments’ legislation, arguing that it should be amended to “assist rather than crucify’’ the small and medium business sector.
The Government, it added, should also insist on an adherence to a fair payment charter as the criterion for granting State contracts.
Mr Fielding said late payments were causing cash flow to dry up. This, coupled with the lack of available and affordable credit from the rescued banks, was putting many small businesses at risk, with the resulting threat of closures and job losses.
