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ISME slams late payments Directive

Friday, March 15 12:30:36

Small and medium sized business lobby group, ISME, today described the new Late Payments Directive as "rubbish" and demanded Government crack down on big business that deliberately withholds paying bills for "free credit".

It rubbished the new EU directive to be transposed into Irish law tomorrow and demanded a strict statutory 30 day payment regime for all businesses trading within Ireland, to be phased in over 3 years.

ISME Chief Executive, Mark Fielding said that the new directive will exacerbate the situation, driving more enterprises out of business, due to the vicious cycle created by larger business and government agencies delaying payments to their smaller suppliers.

"This Government is forever spinning the yarn that they are "SME focused", while their recent actions would state the opposite. They ignored the SME sector in the formation of the implementation group for the Action Plan for Jobs and, by introducing this Directive, they allow big business and Government agencies continue to abuse their dominant position to contract out of the legislation. The figures prove it. The average credit period in 2002 was 52 days; today it is 71 days."

"The new Directive is not only ineffective, it is downright madness, as it will enshrine 60 days rather than 30 into legislation; as if the big business and Government agencies needed that type of assistance to gouge SMEs even more."

"Allowing SMEs to charge 8pc rather than 7pc on late payments is a sick joke, as small businesses are already being told that they will lose business if they even attempt to charge the current rate. This market power and corresponding fear of harming commercial relationships is not addressed by the new directive. Another tick in a box in the Action Plan for Jobs but having the complete opposite effect in hampering job creation," continued Fielding.

"The latest figures from the ISME Credit Watch Survey clearly show the effect that late payments are having on SMEs, caught in a vicious cycle of non-payment from large businesses and Government agencies. The main offenders are, as usual, the state agencies and big business where delays continue to put massive pressure on SMEs. The Government refuses to tackle this issue, as businesses go to the wall and jobs are lost because of totally inadequate legislation."