4th September 2015
Proposal to halve the statutory payment terms of all public sector bodies in order to encourage prompt payment culture
The Minister for Business and Employment, Ged Nash TD, today (Friday 4th September) announced the launch of a public consultation process on a proposal to legislate for all public bodies to pay their suppliers within 15 days of receiving a valid invoice. The proposal, which excludes commercial semi-state bodies, follows on from a Government Decision and is contained in the Action Plan for Jobs 2015. It is also part of the Government’s ongoing drive to tackle the problem of late payment which for many businesses can mean difference between bankruptcy and solvency.
Announcing the public consultation process Minister Nash said, “This is a further step in the Government’s commitment to combat late payment. Not getting paid on time poses a significant threat to the survival of businesses and their opportunity to expand and create jobs. According to the findings of the European Payment Report 2015, recently published by Intrum Justitia, more than half of Irish companies say late payments threaten their very survival.”
Minister Nash added, “It is vitally important that Government continues to pursue initiatives in this area. One initiative we are currently looking at is reducing the statutory payment terms for public bodies from 30 days to 15 days. Improvement in payment performance across the public sector will assist cash-flow, help reduce business costs, and improve business confidence and competitiveness across the economy. It will also encourage and facilitate a drive in the change in our payment culture.”
In 2009, in an effort to assist cash flow for business, the Government introduced the 15 day Prompt Payment Decision. Since then, Central Government Departments have been improving their respective payment times and are now obliged to pay their suppliers within 15 days of receipt of a valid invoice. As part of the commitments in the EU/IMF Programme for Ireland the Government Decision was rolled out to the Health Service Executive, the Local Authorities, State Agencies, and all other Public Sector Bodies, (excluding commercial semi-State bodies), in respect of valid invoices received on or after 1 July 2011.
The Government Decision was introduced on an administrative basis only and, as such, does not affect the statutory requirement for late payment interest which only comes into effect 30 days after receipt of a valid invoice. Also, the Government Decision only applies to commercial transactions between public authorities and business. It does not apply to business-to-business commercial transactions.
While Government Departments and public sector bodies continue to comply with the requirement to pay business suppliers within 15 days of receipt of a valid invoice, it is now proposed, as part of Action Plan for Jobs, 2015, to examine the feasibility of incorporating the Government Decision into national legislation, thereby halving the statutory payment terms for all public sector bodies (excluding commercial semi-State bodies) from 30 days to 15 days.
Concluding Minister Nash said, “Given the likely impact that reducing payment terms for public bodies might have, it is important that any potential policy intervention in this area is fully scrutinised. That is the purpose of this consultation launched today and I would encourage all parties to contribute.”
Stakeholders are now invited to submit their views on this consultation which will run for four weeks from 4 September 2015 and further details on the consultation process can be found at Consultation on proposal to incorporate into national legislation the Government Decision for all public bodies (excluding commercial semi-State bodies) to pay suppliers within 15 days of receipt of a valid invoice
ENDS
For more information contact DJEI Press Office 01 631 2200 or press.office@djei.ie
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