Joan Burton (Dublin West, Labour)
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Question 81: To ask the Tánaiste and Minister for Enterprise, Trade and Employment her plans to improve supply chain finance here, particularly in respect of contractors and suppliers to Government Departments and State agencies; and if she will make a statement on the matter. [32401/09]

Mary Coughlan (Donegal South West, Fianna Fail)
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Access to finance and credit for SMEs has been a prime focus of Government initiatives. Central to our efforts has been the restoration of a properly functioning banking system to support our wider economy and to facilitate our enterprise sector to deal with the current economic situation and to be prepared to benefit from any upturn in the global economy.

Government action has included the bank guarantee scheme, the Banks' Recapitalisation Scheme, the nationalisation of Anglo Irish Bank and the publication of the National Assets Management Agency Bill. SMEs are benefiting from the following initiatives:- · Under the banks' Recapitalisation Package, the recapitalised banks are committed to increase their lending capacity to SMEs by 10% over 2008. · A €100m environmental and clean energy innovation fund has been established by each bank as well as a further €15m each to new or existing seed capital funds. Much of the funding is flowing to small and medium enterprises. · SMEs are now covered by the Code of Conduct on Business Lending to SMEs. This will promote fairness and transparency in the treatment of SMEs by the banks and should facilitate access to credit for sustainable and productive business propositions. · Allied Irish Bank, Bank of Ireland and Ulster Bank are providing funding for SMEs on foot of €300m facilities provided by the European Investment Bank to assist developing SMEs. · The Minister for Finance and I established a Credit Supply Clearing Group last May with bank, business (including ISME and SFA) and State representation. This Group is responsible for identifying patterns of events where the flow of credit to viable businesses appears to be blocked and for seeking to identify credit supply solutions relating to these patterns. · The Minister for Finance has published the Review of Bank Lending to SMEs (Mazars Report) which looked at credit availability and recommended appropriate action. Follow-up work on implementing the recommendations in the Mazars Report is currently ongoing. · To assist and complement the work of the Credit Supply Clearing Group, Billy Kelleher, T.D., the Minister for Trade and Commerce at my Department held eight regional meetings over a two-week period during June and July to discuss with representatives of business, banks and the State sector, their experience of gaining access to bank credit at local and regional level. · As part of the ongoing work of the Government's Credit Supply Clearing Group, the Department of Enterprise, Trade and Employment launched an email link on 28 August last calling for submission from viable businesses that have been refused credit by banks. Such businesses, where the flow of credit appears to be blocked, can now send their details to a dedicated email contact point at the Department.

Apart from initiatives in the banking sector, Government has taken other actions additional to the range of assistance already provided by the enterprise support agencies, to directly assist SMEs getting access to financing. · The Government has provided €100m for an Enterprise Stabilisation Fund. Under the scheme, Enterprise Ireland can give up to €500,000 to viable companies with robust business models that are facing difficulties as a result of the current economic environment. · I have also announced a €250m Scheme to protect up to 27,400 vulnerable jobs in the productive sector of the economy. The Temporary Employment Subsidy Scheme will provide a subsidy of €9,100 per employee over fifteen months to qualifying exporting enterprises in the manufacturing and/or internationally traded services sectors.

With effect from 15 June last all Government Departments are required to pay suppliers and contractors within 15 days of receipt of a valid invoice. Responsibility for implementing the terms of the Government Decision rests with each individual Department. Suppliers pursuing payments should contact the relevant Departmental section with which the contract was arranged. As part of the new arrangements, Departments will be required to report quarterly to my Department on the manner in which they have complied with the Government commitment. These first reports are due to be submitted by 15 October. Departments will also include information on the implementation of the measures in their subsequent Annual Reports.

As a result of this measure, Departments are required to give greater priority to making timely payments and to ensure that suppliers themselves are aware of how they can assist the process by meeting the requirements of Departments in relation to the submission of invoices.

On a more specific level, options for various supply chain finance systems have been brought to the attention of different Departments and Agencies, including my own Department. Promoters of supply chain finance systems have made representations in the context of explaining their proposed systems and outlining opportunities for suppliers and buyers.

Supply Chain Finance involves systems under which payments to suppliers are organised through a financing entity on behalf of a significant buyer or buyers in accordance with the payment terms under the supply contract. Systems can facilitate both private sector and public sector buyers. Within the system the capacity exists for the payment of suppliers by the financing entity earlier than provided for in the supply contract. Such earlier payments would be at a discounted rate on the original invoice. In most supply chain finance systems, the authorisation of the invoice for payment by the buyer is required before the financing entity makes payments to the supplier. Under the arrangement, buyers are required to commit to paying the financing entity in respect of all invoices authorised for payment, within the period of the supply contract.

Supply Chain Finance systems usually require a critical mass of suppliers and buyers, significant initial funds to meet earlier payments and appropriate IT platforms to administer the arrangements and to interface with relevant buyers and suppliers. Apart from these considerations, the Government's commitment mentioned above, for central Departments to pay suppliers within 15 days of receipt of a valid invoice lessens the impact of such supply chain finance systems.

The Government will continue to keep under review access to finance and credit for SMEs and will consider what additional initiatives can be taken to improve the situation.