Smaller businesses are suffering because of delayed payments from State agencies, a new survey claimed today.
The Isme Credit Watch Survey for winter 2010 said delays remained "excessive" despite a reduction in the number of credit days.
The delays could impact on employment, costing jobs and causing small businesses to shut down, the business association said.
The Isme report said businesses are waiting less time to be paid than in the last three quarters, but the delay is still causing cash flow difficulties for small firms. The average payment period in Ireland for SMEs is 72 days, down from 73 days in the previous survey. However, some 43 per cent said there were delays of three months or more in getting paid.
While State agencies were cited as among the offenders, smaller enterprises are also experiencing delayed payments from larger businesses, the research said.
Isme claimed companies are being forced to to accept credit terms outside those outlined in the legislation, with chief executive Mark Fielding describing the laws as a "sham".
"If small business has to pay within 30 days but is forced to give 90 and in some cases 120 and more days credit to the financially more powerful big business and state organisations, then this acts, not just as a constraint on growth but as a threat to the very existence of many small businesses and is the 'Achilles heel' of the SME sector," Mr Fielding said.
"Maintaining business liquidity can be difficult for many small businesses, a task which is not helped when late payment tips the cash flow scales. The fact that so many companies are being forced to wait longer for payment shows that the legislation is a sham, has not been adequately policed, as small businesses continue to be squeezed by their larger counterparts and consequently it is not worth the paper it is written on."
More than 700 respondents took part in the survey.
The situation was worst in Ulster, where payments were the slowest at 80 days, while Connacht had the best record, with payments taking an average of 61 days.
Isme called on the Government to introduce a mandatory payment period that would guarantee all companies within 30 days from the end of month of invoice or delivery, with no exceptions.
