Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Question 86: To ask the Tánaiste and Minister for Enterprise, Trade and Employment if she has met with representatives of the Irish Small and Medium Enterprises to discuss the issue of the length of time small businesses are waiting to receive payments for work and goods delivered. [44921/08]

John McGuinness (Carlow-Kilkenny, Fianna Fail)
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As already outlined to this House in reply to a similar question from the Deputy on 20 November last, the Tánaiste has met with the Small Firms Association (SFA) and with the Irish Small and Medium Sized Enterprises Association (ISME) to discuss their concerns on a range of issues impacting on small business as a result of the current economic situation. I am very much aware of the difficulties facing small firms in relation to access to credit finance and the impact of late payments on the sector.

It has previously been outlined to this House in the reply to Deputy John O'Mahony's Question No. 13 on 20 November 2008, the position in relation to late payments.

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. 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 1 January and 1 July each year at a rate of 7 percentage points above the European Central Bank interest rate on its most recent main refinancing 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 organisation 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.

I am happy to continue to consult with SFA and ISME on this issue, and indeed, on all issues impacting on small business.