Hi °C | Lo °C HUNDREDS of small businesses are being put at risk because public bodies won't pay their bills on time.
Government departments and councils left companies waiting for payments totalling more than €190m last year, despite a promise that all bills would be settled within 15 days of being received.
Cash-strapped local authorities are among the worst offenders for late payments.
Records show that businesses were kept waiting for more than 30 days to be paid some €71m in outstanding bills racked up over one three-month period last year.
The low payment rates, revealed in returns to the Department of Jobs, Enterprise and Innovation, come as thousands of businesses across the State struggle to stay afloat.
Lobby groups say a culture of late payments in some public bodies is "strangling" small firms, prompting calls for the establishment of a Small Claims Court for business debts of up to €5,000.
While government departments have improved their payment records, the biggest problem is in local authorities and the Health Service Executive which spend billions every year on essential services.
One local authority – Sligo County Council – paid just 55pc of its bills within 30 days. Other slow payers include Cork County Council and Mayo County Council.
The low payment rates come despite a May 2009 commitment that government departments would pay their businesses suppliers within 15 days of receiving an invoice.
Other public bodies, such as councils and the HSE, are supposed to pay within 30 days or interest is added to the bill.
But smaller businesses are reluctant to charge interest on the bills for fear of losing out on future work.
This will change from next month under a new EU late payment directive where payments that take longer than 30 days to process will automatically incur interest penalties.
Figures compiled by the Irish Independent show that government departments spent €3.5bn last year on essential goods and services. But it took them more than 15 days to settle bills amounting to €191m, or 5.5pc of the total spend.
Difficulties
This relates to 34,844 individual invoices with an average amount of almost €5,500 each.
Public bodies are notorious for delaying payments, with companies having problems getting invoices approved or paperwork being lost.
It was hoped that reducing the payment period to 15 days would help ease cash-flow difficulties for smaller companies, particularly as banks cut back on short-term loan and overdraft facilities.
The Small Firms Association (SFA) said that while government departments had improv-ed payment rates, the bulk of spending was done by local authorities and the HSE.
"The central government departments, by and large, have done well but that's not where the main buying goes on," SFA director Patricia Callan said.
"The problem companies have is the 15-day clock only starts ticking when the invoice is approved. It can be 60 days before they accept the invoice is valid. The 15 days is entirely voluntary. Until you get serious about it, you're still going to see that lag."
Irish Independent
