ISME, the Irish Small and Medium Enterprises Association, has welcomed the continued improvement in commercial payments in the first quarter of 2014, at the launch of the SME Credit Watch Survey, today.
However ISME highlighted the continued failure of the Prompt Payments legislation as only 3% of SMEs feel they can charge interest on late payments, threatened by larger business who will stop dealing with them.
Other findings from the survey detailed that the average payment period period for SMEs in the first quarter of 2014 has improved from 62 to 60 days. This is the shortest period recorded since autumn 2007.
"We welcome the reduction in late payments, however 60 days is still too long and the fact that less than 3% of businesses can charge interest on overdue payments, clearly shows the failure of the legislation in the small businesses unequal struggle with larger customers", said Mark Fielding, ISME's chief executive.
25% of respondents are experiencing delays of three months or more, which is an improvement on the 30% in the final quarter of 2013. Furthermore, 5% are experiencing a payment period of over 120 days.
Late interest is charged by only 2% of micro and small businesses, while 9% of medium sized businesses charge it.
"Allowing SMEs to charge 8% on late payments is a sick joke, as small businesses are already being told that they will lose business if they even mention interest", Mr Fielding added.
Of those surveyed, 79% favoured a statutory 30 day payments regime, with no opt out.
ISME has called on the Minister for Jobs, Enterprise and Innovation to introduce, publicise and champion a "Fair Payment Charter" for all businesses. They believe this initiative would stop the abuse of dominance by large business and state agencies and allow indigenous small enterprises to survive and maintain jobs.
In conclusion, Mr Fielding called on Minister Bruton to exert pressure on the multinationals and large businesses, through the IDA and Enterprise Ireland to pay promptly and at a minimum to sign up to the charter.