Late payments are putting small Irish companies in a difficult financial position, with the average payment taking 62 days, according to Avine McNally, acting director of the Small Firms Association (SFA).
This conclusion is drawn from the SFA’s Late Payment Survey, conducted at the end of November 2013, which showed that 56% of small firms offer credit terms of 30 days or less and 71% of companies experience late payments on their credit terms.
The survey also found that 52% of companies have a written contract on payment terms with their customer, with just 44% carrying out credit checks on new customers. Only 10% of companies were found to use debt collection agents to collect overdue payments.
1 in 4 respondents to the survey were unaware of legislation that allows them to automatically charge interest penalties on accounts outstanding more than 30 days, and 73% of respondents who were aware chose not to apply the interest penalty, citing reasons such as fear of losing business, feeling that the customer is too big to challenge, and concerns of gaining a reputation as a difficult supplier.
“Getting paid on time is a never ending problem for most small businesses,” said McNally. “Late payment causes serious cash flow problems; requires firms to extend overdraft facilities and consumes a great deal of management time. This in turn affects the ability of the business to compete, be profitable and grow.”
© 2013 - Checkout Magazine by Karis Copp
