Wednesday, March 20 12:17:21
Dublin Chamber of Commerce is launching a new "Pay online - Pay on time" pilot initiative aimed at getting more businesses to use online payments to increase the speed of payment and inject up to E640m back in to firms' cash-flow.
Ireland is one of the slowest countries to make payments in Europe and business-to-business cheques are compounding the cash-flow problems of SMEs, according to Dublin Chamber.
"Cash-flow is the second biggest challenge for SMEs after making sales," said Gina Quin, Dublin Chamber Chief Executive. "The 'Pay online - Pay on time' initiative aims to find a common solution that will help businesses move in step to world class payments habits."
A recent Central Bank study of cheques found a direct link between late payments culture and the use of cheques in Europe. According to Central Bank figures, Irish businesses issue 44pc of cheques and are recipients of 50pc of them with SMEs accounting for 9 out of 10 business cheques. Twenty of the EU-27 countries have effectively eliminated cheques.
"There is no country in Europe that has prompt payment of businesses and is a major user of cheques. Breaking this reliance on cheques will be a challenge as no business will say no to payment but if we can work as a business community to solve the problem we will all benefit," Ms Quin said.
The Central Bank has estimated that there is a potential cash flow improvement of about E640m and cost reductions of E23m for Dublin businesses if business-to-business cheques are eliminated.
The pilot will run over the next three months to help SMEs seeking to make the transition from paying by cheque to paying online. Support from banks and other businesses will be provided as part of the pilot to assist SMEs overcome any challenges they might face. The result of the pilot will help to grow a larger project that will seek to move 50pc of Dublin Chamber's SMEs online by the end of this year. The pilot results will also be shared with the National Payments Plan steering group.