Small firms say pay delay continues to lengthen
It now takes SMEs an average of 59 days to get paid, according to an Isme survey
Photographer: Simon Dawson/Bloomberg
Small and medium-sized companies are taking longer to get paid, with the average payment period increasing to 59 days in the first three months of the year.
That’s according to the Isme Credit Watch Survey, which found the situation had worsened from the previous quarter.
Almost a quarter of firms said there was a delay of three months or more, compared with 15 per cent in the final quarter of 2015, while 4 per cent said they were waiting more than 120 days.
Despite the problems late payments pose to cash flow of enterprises, only 1 per cent of small companies and 4 per cent of medium sized businesses impose a financial penalty .
The business lobby group has called on the incoming government to prioritise the issue, naming and shaming those who delay on payments, and review the Prompt Payments legislation.
“The vital cash-flow for small and medium enterprises is being hampered by late payments from big business and State agencies,” said Isme chief executive Mark Fielding. “ While this fact has been acknowledged in the Governments Action Plan for Jobs, nothing has been done to improve the situation and once more the SME sector is ‘thrown to the wolves’. The introduction of the Fair Payments Charter is but a fig leaf to cover the inability of Government to do anything to rectify the deteriorating situation, as accountancy led big business simply ignore it”.
The association said State agencies, including the HSE, should be forced to adhere to the 15 day rule.
“It is essential that all businesses and in particular small business be in a position to predict their cash flow with some degree certainty. However, because of the abusive dominance of big business, cash flow across the entire SME sector is, once again, beginning to dry up,” Mr Fielding said.