Irish companies doing business with the Government can look forward to quicker payment and an easing of cash-flow problems following new regulations introduced by the Minister for Enterprise, Employment and Trade, Ms Harney.
The legislation allows for heavy penalties for government departments and other public bodies that fail to pay firms on time for their services.
Late payments by government sponsored bodies such as health boards have been a problem for many small firms, according to lobby groups such as the Irish Small and Medium Enterprises Association (ISME).
Under the regulations announced by the Minister, public bodies that are late in paying suppliers face interest payments of 11.75 per cent. According to Ms Harney, the interest has been set at a "penal level", which should ensure that delays by public bodies in making payments become very much the exception.
ISME's chief executive, Mr Frank Mulcahy, said the move was innovative and welcome. However, he warned that many regional State boards do not yet seem to be conversant with the new rules.
The new legislation should provide a significant fillip for Irish business: public procurement on public goods and services is £4.7 billion a year. According to Mr Mulcahy, all businesses have been guilty of late payments but many government departments have been persistent offenders, with waits for payment of up to six months common.
The Prompt Payments of Accounts Act comes into force on January 2nd. Under its terms, payments must be made by the date due. However, if there is no written contract, or if the contract does not specify a payment date, payments must be made within 45 days of receipt of the invoice or delivery of the goods or services.
The rate for overdue payments has now been set at 0.0322 per cent every day the payments remains due, or 11.75 per cent a year.