THE GOVERNMENT will pay all its bills to suppliers within 15 days of their invoicing in a bid to help ease the cash flow crisis facing Irish businesses, Tánaiste and Minister for Enterprise, Trade and Employment, Mary Coughlan said yesterday.
The decision to halve the payment deadline – from within 30 days of invoicing to 15 – was taken at yesterday Cabinet’s meeting and covers all purchases made by Government departments, but not other State bodies and local authorities.
Under 1997 legislation, all State bodies, local authorities and those working on State-paid contracts are obliged to pay within the calendar month. But Isme, which represents small- and medium-sized businesses, said the rules are increasingly ignored.
The 15-day payment rule will come into force from June 15th. “I hope that it will also set an example for businesses in the private sector to improve their payment record and pay each other more promptly,” the Tánaiste said.
In a bid to ensure that the order is obeyed, all departments will now be required to send a quarterly report to Enterprise, Trade and Employment showing their payment history, and include details in annual reports.
“Departments will now give greater priority to making timely payments and to ensuring that their suppliers are fully aware of what actions they must take to support more speedy payments. Suppliers will need to ensure they submit a valid payment request to the appropriate departmental source. Any issues arising with payments should be raised directly with the department concerned,” said the Tánaiste.
Under the 1997 Prompt Payments Act, suppliers are entitled to impose an interest penalty of 0.0301 per cent per day – or 11 per cent per year – for late payment, while 2002 EU legislation extended this penalty to all transactions.
Currently, State departments automatically add a late payment supplement to bills where they fail to pay on time, the Department of Enterprise, Trade and Employment said last night, although this was disputed by Isme.
Small businesses are now waiting 69 days on average, up from 60 days last year, Isme head of research Jim Curran said. “The prompt payments legislation is unworkable. Small businesses are finding it difficult to get paid both from the State and private business.”
In a survey last year, 400 Isme member companies reported that just one in four are being paid on time, with 29 per cent experiencing 90 day delays, and 6 per cent left waiting 120 days.
