Alex White (Dublin South, Labour)
Link to this: Individually | In context

Question 76: To ask the Minister for Enterprise, Trade and Innovation if his attention has been drawn to the significant delays faced by many small businesses in obtaining payment for supply of goods and services to certain large and high-turnover companies and businesses; the steps he will take to address this phenomenon, which poses a serious danger to the very survival of such small businesses; and if he will make a statement on the matter. [6075/11]

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

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, in the first instance. 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 8% per annum or 0.022% 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. The enforcement of contractual rights, including any rights and obligations provided for by the Regulations, is a matter for individual suppliers. The Regulations do not provide for any enforcement role for my Department in respect of these matters.

The Deputy will be aware that since 2009, Central Government Departments have been improving their respective payment times, so as to assist the cash flow of businesses and are now obliged to pay their suppliers within 15 days of receipt of a valid invoice. This voluntary 15 day prompt payment period is being rolled out to the Health Service Executive, the Local Authorities, State Agencies, and all other Public Sector Bodies, (excluding Commercial Semi-State bodies), in respect of valid invoices received on or after 1 July 2011. This requirement is being introduced on foot of commitments made under the EU/IMF Programme of Support for Ireland. This initiative should have a considerable impact on cash flows of SME customers.