Late payments causing insolvencies

Delayed payments are threatening the survival of many small and medium enterprises and forcing others into insolvency, according to the sector’s representative body Isme.

In a statement today it said small firms were now waiting over two months, or a record 69 days, with larger companies and the State among the worst offenders.

It said a third were forced to wait over 90 days for payment with 10 per cent waiting 120 days.

Mark Fielding, Isme chief executive, said the delays because of changed bank lending policies were adding unnecessary administration to small firms and “at worst, is leading to insolvency”.

He described late payment by larger companies as an abuse of a dominant position saying it amounted “to an ‘interest free loan’ which SMEs are obliged to give to their much larger and economically stronger customers”.

The result is “smaller businesses have to seek increased facilities from their banks who are not releasing funds . . and so businesses are closing down, not due to lack of profits, but due to lack of cash”.

Isme is calling for mandatory payment within 30 days of the end of the month of invoice or delivery, with no exceptions.