SMEs at risk from Ireland’s culture of late payments

SMEs and late payments
  • Over two thirds of SMEs believe there is a culture of late payments in the UK and Republic of Ireland
  • Four in 10 SMEs say they have felt the negative effects of late payments 
  • SMEs feel forced to write off unpaid bills

Small and medium-sized enterprises in Ireland and Republic of Ireland are having issues managing their businesses because customers repeatedly fail to pay their bills on time, new research from Close Brothers reveals. Over two thirds of SMEs (69.37%) believe there is a culture of late payments, these companies often feel the effects disproportionately compared to larger organisations.

Close Brothers’ research indicates that repeated efforts to tackle late payments have had little or no effect, with many SMES suffering negative consequences. 72.73% of SMEs surveyed said late payments made it difficult for them to manage their cash flows, reporting that some had to write off as much as 50% of turnover when customers failed to pay money owed.

In Northern Ireland, large corporate organisations are the most likely customers to pay their bills late, the survey suggested. However, in the Republic of Ireland individual debtors are a larger issue.

David Thomson of Close Brothers said that despite a concerted effort by policymakers to clamp down on late payments, SMEs continued to suffer at the hands of customers slow to settle their bills.

“Despite several initiatives aimed at tackling the UK’s late payments problem, our research shows that SMEs are still getting a raw deal, with large customers in particular failing to pay their bills on time,” David Thomson said. “The voluntary Prompt Payments Code introduced in recent times by the Government has not had the widespread impact we might have hoped for, and while plans for a Small Business Commissioner may help in time, SMEs need support now.”

Close Brothers’ research also suggests that many SMEs in the UK and Ireland could do more to protect themselves from the issues late payments bring. Currently, 86% say they have not investigated services such as invoice finance, which could be used to mitigate the worst effects of late payments.

“SMEs deserve the protection of the law – and not to be exploited by larger organisations that routinely fail to make payments on time,” David Thomson of Close Brothers added. “However, it also makes sense for SMEs to do everything they possibly can to help themselves, including investigating services such as invoice finance, which can help them manage cash flow effectively in the face of a late payments problem.”

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