Dáil Éireann Debate, Thursday - 24 January 2013
11. Deputy John Browne asked the Minister for Jobs, Enterprise and Innovation the measures he will take to ensure that small and medium enterprise receive prompt payment for their services; and if he will make a statement on the matter. [3314/13]
View answer55. Deputy Brian Stanley asked the Minister for Jobs, Enterprise and Innovation his plans to reduce the 62 day average payment delay culture in Ireland which is having a large negative effect on small business. [3243/13]
View answerI propose to take Questions Nos. 11 and 55 together.
Prompt Payments for goods and services rendered is critical to the effective working of any economy and is an issue on which this Government places great emphasis.
In an effort to help ease cash flow difficulties for Irish small businesses operating under the current economic environment, while at the same time setting an example for businesses in the private sector to improve their payment record by paying each other more promptly, Ireland has introduced, on a voluntary basis:
- A 15 days prompt payment requirement for all central Government Departments to pay their business suppliers within 15 days of receipt of a valid invoice. This arrangement applies to all valid invoices received on or after 15 June 2009;
- A similar arrangement has now being extended beyond central Government Departments to our State Agency Sector to include the Health Service Executive, the Local Authorities, State Agencies, and all other Public Sector Bodies, (with the exception of the Commercial Semi-State bodies). These new arrangements apply in respect of valid invoices received on or after 01 July 2011.
The most recent set of composite figures published are for Quarter 4 2012 and show that 98% of Government payments, valued at €1.25bn, were paid to suppliers within 15 days. The Quarter 4 2012 returns also shows that 93% of Agencies’ payments, under the remit of my Department and valued at €53.9m, were paid to suppliers within 15 days. This clearly shows that central Government Departments, Bodies and Agencies and Local Government continue to comply with the Government requirement to pay business suppliers within 15 days of receiving a valid invoice.
My Department promotes improved payment practices and monitors the operation of the Prompt Payment of Accounts Act, 1997, and the Late Payment in Commercial Transactions Regulations 2002.
At Present the issue of late payment is covered by the European Communities (Late Payment in Commercial Transactions) Regulations 2002 (S.I. No. 388 of 2002). Under these Regulations, it is an implied term of every commercial transaction that where a purchaser does not pay for goods or services by the relevant payment date, the supplier shall be entitled to interest (late payment interest) on the amount outstanding.
Ireland must transpose the Recast of the Late Payment Directive (2011/7/EU) which repeals and modernises the old rules. Minister Bruton signed the Statutory Instrument transposing Directive 2011/7/EU was signed on 22 December 2012 and this will come into effect on 16 March 2013.
The proposed legislation will act as a deterrent to late payment and as a driver for payment on time by establishing a clear expectation in law that payment will be made according to agreed terms. It lays down the specific deadlines for the payment of invoices and establishes a right to compensation in the event of late payment in all commercial transactions, whether they relate to transactions between private or public undertakings, or between undertakings and public authorities.
In practical terms, this translates into the following operational objectives:
- Confront debtors with measures that successfully discourage them from paying late
- Provide creditors with measures that enable them to fully and effectively exercise their rights when paid late.
I am aware that part of the difficulty for small business relates to accessing working capital from banks. A range of national initiatives have been developed to support the flow of credit to enterprises. In addition to initiatives to recapitalise and restructure the banking sector, initiatives have been developed to build better business banking relationships (e.g. the Code of Conduct for Business Lending to SMEs and the establishment of the Credit Review Office). The Action Plan for Jobs 2013 will build on the recent achievements such as the introduction of the 15 day payment period across the public sector in general and the ability for business to attach officially new payment requirements to relevant invoices.
