Irish companies among slowest to pay invoices - survey

Irish businesses are among the slowest in Europe for making payments, taking an average of 60 days to settle their invoices.

Public sector organisations in Ireland were even slower, taking an average of 70 days, according to a new European payments survey by credit management company Intrum Justitia.

"Governments are not setting a good example when it comes to paying contractors on time, thereby putting many supply companies at a large risk," the survey said.

Irish consumers settle their payments within 43 days, making the average payment duration in Ireland just over 51 days, and placing the Republic in the bottom third of the countries surveyed.

The risk of payments failing was lower in Ireland than in many European countries, but the report said that businesses should remain cautious due to increased indebtedness in private households.

The Irish businesses surveyed tended to be pessimistic in respect to future payment risks.

The pan-European payments survey showed that the average payment duration - the time between the sending of an invoice and it being settled - was just over 59 days in Ireland.

The average payment delay - the time after the agreed payment date, increased slightly to almost 17 days, up from 15 days in 2004.

Intrum Justitia said that around one billion invoices default in Europe every year and turn into debt collection cases.

The total amount of overdue receivables in the EU is around €250 billion - roughly equivalent to the gross domestic product (GDP) of a country the size of Austria.

The increase in payment delays from 15.1 days in 2004 to 16.8 days in 2006 costs businesses around €25 billion a year.

"The size of the problem is awesome and calls for stronger action by companies themselves and by legislators," said Nick Biggam, managing director of Intrum Justitia Ireland.

Late payment habits damage business and disrupt trade, hindering economic growth, he added, with small and medium-sized enterprises (SMEs) hit particularly hard.