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Half of Irish companies forced to sack workers because of late payments

The Government has been blasted for its failure to set an example or pass laws to tackle the problem.

NEARLY HALF OF Irish companies are forced to dismiss staff because of the pressure put on cash flows by late payments.

A new survey of by payment manager Intrum Justitia  shows that unpaid bills are putting Irish employers under huge pressure, depressing the job market and leading to redundancies.

One expert said that a total of €3.5 billion is unpaid to Irish companies at any one time, with larger companies and the Government slow to pay contractors, who in turn are forced to lay off staff.

The pressure is such that, in addition to the 47 per cent of companies that say the problem has forced them to lay off staff, 60 per cent of employers have held off on making new hires because they are hobbled by late payments.

Intrum Justitia UK & Ireland sales director Gerry Barrett told TheJournal.ie that Ireland is at risk of falling into the category of worst-performing countries such as Spain, Greece and Italy when it comes to bill payment.

He sharply criticised both Government failure to legislate for the issue and the State’s slow payment of contractors itself.

“The government aren’t great payers either. They’re not leading by example. There’s no moral authority.”

He continued: “Until they make it punishable by law, nothing’s going to change.”

Risk

The survey was conducted across 10,000 European companies.

Barrett said that Ireland was close to falling into the bottom category of countries such as Spain, Italy, Greece and Portugal, where the late and non-payment of bills is endemic.

By contrast, it is illegal not to pay for a service in many Nordic countries.

He continued:

This gives the lie to the narrative that’s being spun. That we’ve turned the corner, that everything’s rosy in the garden. It’s not.

“It’s the ‘extend and pretend’ philosophy that’s here at the moment.”

The report states: “The more positive mood of the European Commission that recovery is underway is definitely not shared by the over 10,000 companies who took part in the European Payment Index 2014 survey.”

The report says that more companies than ever before say late payments are a threat to their ability to survive and grow.

Barrett said that previous attempts to tackle the issue with guidelines, such as the European Payment Directive, were useless and were widely ignored, particularly by larger companies.

“The EPD is effectively being ignored. The big companies are eating up the small companies, and the smaller companies are also passing that down the food chain. It’s like a virus that affects everybody.”

Late payments, mounting losses

The survey shows that the delays in payments in Ireland usually last around 29 days for business-to-business payments, with 14 days the norm for public sector payments.

This compares unfavourably with countries like Finland, where payment delays range from four to six days, or Denmark, where they rarely exceed 10.

However, apart from the Nordics, Ireland also performs at the same level – or worse – than many Eastern European countries. Romanian payment delays cover a span from 16-21 days, Slovakia from 14-25, and Poland around 18 days.

Companies are also being forced to write off increasing proportions of debt. This has climbed from 2.8 per cent in 2011 to 3.7 per cent in 2014.

The survey found that some 74 per cent of Irish business people feel less confident about getting the financial support from their bank, with 57 per cent saying that risk will increase more over the next year.

Ronan Horgan, who is managing director of Ireland’s largest invoice financing provider Bibby Financial Services, said:

“Late or non-payment of debt can have a devastating effect on any company, particularly its cash-flow and ultimately its ability to successfully trade.”

Firms being ‘strangled’ by late payments>

Bank ‘cherry picking’ hurts SME sector>

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19 Comments
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    Mute Paul Roche
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    May 12th 2014, 8:45 PM

    The bigger they are, the slower they pay.

    148
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    Mute The Hooded Biscuit
    Favourite The Hooded Biscuit
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    May 12th 2014, 11:52 PM

    So true, got to the stage with my business where I have refused work from some large businesses who think I should be grateful, not worth it for the pain of constant chasing and chasing.

    22
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    Mute Ian Mac Eochagáin
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    May 12th 2014, 9:18 PM

    “Payment managers”? Intrum Justitia are debt collectors who use underhand methods (anonymous voicemail messages and hand-delivered notes) to chase up debtors. If everyone started paying their bills on time Intrum would go out of business.

    That’s not exactly true about Finland. Well, maybe the stats are, because people are more disciplined. Here if you forget to pay a bill (which has happened to me once or twice) it takes them a week or two to notice and then they send you a reminder.

    57
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    Mute Jimbo
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    May 12th 2014, 8:33 PM

    Well that sucks balls.

    51
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    Mute Noble Gas
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    May 12th 2014, 8:50 PM

    We pay after 65 days – contracts says 30. Drives the Germans and French suppliers banana’s

    40
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    Mute Crocodylus Pontifex
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    May 12th 2014, 9:04 PM

    Not as bananas as that unnecessary apostrophe is driving me.

    76
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    Mute Joseph Siddall
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    May 12th 2014, 9:14 PM

    Noble Gas, …..and you’re proud of that fact ? Suppose your company don’t expect it’s customer to honour payment terms so they can take the p1ss as well. Pathetic excuse for management.

    56
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    Mute Kevin Higgins
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    May 12th 2014, 8:45 PM

    Jobs jobs jobs, FG can’t even do that right and it’s all they do. Skew figures

    39
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    Mute Gaucho Doyle
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    May 12th 2014, 10:21 PM

    Getting paid business to business in sixty days would be good in Ireland. It’s more like 90 to 120, you ask some campanys to pay you after 30 days and they look at you like you have two heads and then come up with any accounting excuse not to pay you. ‘Oh we won’t be doing a cheque run till the end of the month’, ‘One of the directors is away at the moment, so we won’t be able to issue a cheque till he’s back’ bla bla bla Then why do you order these goods and services!!!!!!!!!

    39
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    Mute Happy Go Lucky
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    May 12th 2014, 10:45 PM

    You forgot the cheque is in the post…

    18
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    Mute blah!
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    May 12th 2014, 9:07 PM

    Ok maybe I’m missing something, the article, in paragraph two, refers to “unpaid bills”, then further on states that for business to business, payments are made around 29 days with 14 days the norm for public sector payments. Prompt payment legislation, as far as I know, requires payment to be made within 30 days from receipt of invoice. These are not “unpaid bills” or “late or non-payment of debt”. Maybe 30 days is too long in our digital age but at least call it what it is. On time, legislatively compliant payments. Or perhaps the problem is elsewhere, lack of credit to cover the 30 day period. That would be the banks again….

    33
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    Mute Dave Mac
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    May 12th 2014, 9:48 PM

    Intrum justicas sales manager!!

    He just let slip that you don’t have to pay them!

    Idiot!

    26
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    Mute Simon O'Keeffe
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    May 12th 2014, 9:34 PM

    Doh! What do they think jobsbridge was created for.

    17
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    Mute Patrick Linehan
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    May 12th 2014, 10:47 PM

    It’s called the Tragic Roundabout. I can’t pay A because I haven’t been paid by B who’s owed money by C.

    13
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    Mute Lisa Saputo
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    May 12th 2014, 11:55 PM

    Are debt collectors called payment managers now?

    13
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    Mute Christopher O Callaghan
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    May 18th 2014, 1:16 AM

    Payment managers/credit controllers/credit management advisors etc

    1
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    Mute Christopher O Callaghan
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    May 18th 2014, 1:16 AM

    Payment managers/credit controllers/credit management advisors etc

    1
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    Mute GATHERINGYOURMONEY14
    Favourite GATHERINGYOURMONEY14
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    May 12th 2014, 11:38 PM

    The bust shmall chounthry ta doo bwisnish in.
    Because you don’t have to pay your suppliers.

    8
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