16th August 2015
Minister Nash concerned that half of Irish companies say late payments threaten their survival
A new report highlights the damaging impact of late payments across Ireland and the EU. 8,979 European companies were surveyed by Intrum Justitia for the European Payment Report 2015
The report shows clearly that not getting paid on time poses a significant threat to the survival of businesses and their opportunity to expand and create jobs.
Key findings reveal that in Ireland:
- 51 per cent of Irish companies say that a consequence of late payments could be a threat to survival;
- 7 per cent of Irish companies’ yearly revenue has been written off as opposed to a European average of 3.1 per cent; and
- 69 per cent of Irish companies surveyed state that the reason for late payment is due to debtors being in financial difficulty.
In relation to the EU as a whole:
- every third company in Europe (the equivalent 8 million companies) would be able to hire more employees if they got faster payment from debtors;
- every fourthcompany in the Europe (24%) stated that there is a correlation between late payments and the need to lay off staff;
- 6 out of 10companies estimate that late payments are part of a deliberate strategy of their debtors; and
- Half of the companies surveyed by Intrum Justitia say that they have been asked to accept longer payment terms than they are comfortable with.
The Minister for Business & Employment, Ged Nash TD, said: “These findings are indeed very worrying for businesses throughout Europe and here in Ireland. They clearly demonstrate the negative impact that waiting on payments can have on business by constraining cash flow, adding financial costs and fuelling uncertainty.
“Businesses providing goods and services need cash flow certainty and are entitled to expect that their payments will be made on time. Certainty on payment inspires confidence across the supply chain. This confidence stimulates both investment and growth and is good for both suppliers and customers.”
“The EPR 2015 also highlights just how important it is for policy makers to take decisive action to tackle late payments. In Ireland, we have undertaken a number of initiatives including most recently in my Department, the Prompt Payment Code, which is aimed at improving cash flow for businesses and, ultimately, driving a change in our payment culture.”
The Prompt Payment Code has specifically been developed by business for business. By signing up to the Code through the online portal www.promptpayment.ie, companies agree to:
- Pay suppliers on time within the terms of the contract, or in accordance with legislation;
- Give clear guidance to suppliers on payment procedures; and
- Encourage good practice by promoting the Code.
Minister Nash continued, “Businesses that choose to sign up to the Code are sending out a real signal that they will stick to their payment terms. For those with no pre-agreed payment terms, the Code works to combat this. For suppliers, this means they can build stronger relationships with their customers, confident that they will be paid on time.”
“For the Code to be successful, however, we need businesses to sign up. I would, therefore, urge all business, big and small, to support this important initiative and log onto www.promptpayment.ie and sign up to the Code today”.
Also commenting on the findings of the EPR 2015, Mark Chandler, Managing Director from Intrum Justitia Ireland said, “There is a cultural belief in Ireland that it is acceptable not to pay on time however we need to help businesses understand that late payments can be seriously detrimental to cash flow and employment. Contracts and services are agreed based on payments arriving on time. Late payments eat into margins and can ultimately destabilise any company. The Prompt Payment Code is a step forward in getting a better payment culture and allowing businesses to help put Ireland on a path of solid economic recovery.”
“Ireland exported over €7.8 billion in May 2015 of goods and services, if this was traded within Ireland, based on current payment behaviour, Irish businesses would be forced to write off €310 million due to non-payment. The yearly write off rate for Europe is 3.1% and our study shows that 7% of the Irish companies’ total revenue is unpaid and therefore is written off. This converted to actual money is €2 billion annually.”
“Our report also indicates that 8 million companies across the EU would probably employ at least one more if they received faster payments. This example illustrates the great importance of payment issues and payment management,” concluded Mr Chandler.
ENDS
For more information contact: Deirdre Grant 086 0484 279 or DJEI Press Office 01 631 2200 or press.office@djie.ie
Note for Editors:
Intrum Justitia is a Credit Management Services company providing a range of services including debt collection.
The European Payment Report 2015 is based on a survey that was conducted simultaneously in 29 European countries between February and April 2015.
Prompt Payment Initiatives already introduced in Ireland, at both National and EU Level include:
- Introduction in 2009 of the 15 day prompt payment requirement whereby all Government Departments must pay their suppliers within 15 days of receipt of a valid invoice. This initiative was extended in 2011 to include the wider Public Sector;
- Implementation of the EU Late Payment Directive which came into effect on 16th March, 2013 - (S.I. 580 of 2012). The legislation aims to make pursuing payment a simpler process across the European Union, reducing the culture of paying late and making paying on time the norm; and
- National Late Payment Information Campaign, launched at the end of 2013, aimed at providing businesses with information on the new measures introduced to support prompt payment.
Back to Department News