John O'Mahony (Mayo, Fine Gael)
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Question 13: To ask the Tánaiste and Minister for Enterprise, Trade and Employment her plans to promote a culture of paying bills quicker in the small and medium enterprise sector, if she will take a lead on this issue; if she will ensure that her Department will commit to better the payment time of 30 days under the European Communities (Late Payment in Commercial Transactions) Regulations, 2002 to 15 days of receipt of invoice; and if she will make a statement on the matter. [41944/08]

Mary Coughlan (Donegal South West, Fianna Fail)
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Payment terms in commercial transactions are determined by the parties concerned and the responsibility for the collection of those payments and general credit control rests with the selling enterprise.

As the Deputy has mentioned, the issue of late payments in commercial transactions is addressed by the European Communities (Late Payment in Commercial Transactions) Regulations 2002 (S.I. No. 388 of 2002).

In accordance with 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. Interest shall apply until such time as payment is made by the purchaser. The current interest rate applicable is 11.00% per annum or 0.0301% per day. This rate is set as at 1st January and 1st July each year at a rate of 7 percentage points above the European Central Bank interest rate on its most recent main re-financing operation. In the absence of any agreed payment date between the parties, late payment interest falls due after 30 days has elapsed. The 2002 Regulations also provide for compensation for debt recovery costs. Greater use of these provisions would assist in achieving earlier payments.

In addition, under the Regulations the use of terms that are grossly unfair may be unenforceable and such terms may be challenged in Court on the basis of criteria specified in the Regulations. Organisations representing small and medium sized enterprises may challenge any terms that they feel breach the Regulations. It is open to any such organization to pursue this operation. However, I understand that this provision of the Regulations has not been availed of to date.

The EU Commission has indicated that it will be proposing amendments to the Late Payments Directive early in 2009. Their intention is to simplify the provisions of the original Directive and to clarify issues such as interest payments, with a view to discouraging late payers and guaranteeing that SMEs are paid within time for all commercial transactions. Ireland will work actively in negotiating amendments.

Government Departments have a role to play in leading by example. There already is transparency in Departments' paying practices with each Department required to report on late payment interest incurred by it during the year by way of a specific note to its Annual Report. I am not aware that payments by Departments, including my own, are a cause of particular concern and I would welcome specific problems relating to late payments by Departments being brought to my attention.