Ireland’s Small Firms Association (SFA) has released the results of its Winter Credit Conditions Survey, which has found that small businesses are, on average, waiting 75 days from invoice date for payments to be settled. This is an increase from the 66 days reported in the Autumn Credit Conditions Survey.

The SFA has especially levelled criticism at Ireland’s Health Service Executive (HSE), which it accuses of breaking EU guidelines that recommend that public authorities settle accounts within a 30-day period. The HSE sets out in its terms and conditions that payments will be made within 45 days; this, the SFA claims, not only contravenes the EU Late Payment Directive provisions, but also government guidance in this area.

Patricia Callan, Director of the SFA, argued that it is appalling that the HSE is “in direct contravention of [government] commitments … that all central government departments will pay their bills within 15 days and all other State bodies and local authorities will pay within 30 days”.

The survey found that 64% of respondents revealed that late settlement of invoices had an impact on their cashflow, while 48% of companies had experienced clients extending their credit terms. While regulations allow businesses to charge interest on late payments, only 16% of those surveyed included late interest charges in their terms and conditions.

Callan continued: "The result is that the cost of doing business will increase, as many companies will have to resort to debt finance, such as overdrafts, to facilitate their cashflow requirements. And that is if they can actually get it, with 22% of respondents reporting a decrease in working capital availability from the banks over the past three months and 14% reporting an increase in the cost."

She also claimed that public bodies are exploiting a clause that allows companies to waive the 30-day payment agreement, and called on the government to instruct the public sector to settle all of its bills within 15 days. “If the government is serious about helping small business with their cashflow problems, then this is essential,” she added.

The SFA has called for the establishment of a small claims court for business to help enforce rights available to businesses under Ireland’s late payment regulations.