Irish government departments will settle their bills within 15 days as part of a major effort to boost cash flow to businesses. Senior ministers have also unveiled a new Credit Supply Clearing Group responsible for ensuring that banks provide credit to viable companies.
Mary Coughlan, Ireland’s Tánaiste – or Deputy Prime Minister – said the new rule will come into force on June 15th. Existing Irish legislation from 1997 obliges all public bodies, including local authorities, to pay suppliers within one calendar month. A penalty of 11% per year already applies to late payments in Ireland.
The new plan to halve the length of time taken to pay invoices applies only to government departments but not other state bodies and city councils. Coughlan said she hoped the move would set an example for business in the private sector to pay more promptly.
All government departments will be required to submit quarterly reports to Ireland’s Department of Enterprise, Trade and Employment to prove they are meeting the new requirements.
“Departments will now give greater priority to making timely payments and to ensuring that their suppliers are fully aware of what actions they must take to support more speedy payments,” said Coughlan.
ISME, the Irish small and medium enterprise association, said companies are currently waiting an average of 69 days to be paid. “Small businesses are finding it difficult to get paid both from the state and private business,” said Jim Curran, head of research at the SME lobby group.
Meanwhile, Coughlan and Irish Finance Minister Brian Lenihan have revealed details of a new scheme designed to encourage banks to lend to businesses. The Credit Supply Clearing Group, which includes representatives from banks, industry and the public sector, will identify cases where the flow of credit to “viable projects” is blocked.
The group will attempt to find solutions in cases where funding is not forthcoming, the Irish government said in a statement. It will also “ensure that banks meet their commitments recapitalisation package” which saw billions of Euro in public money injected into the Irish banking sector.
- European Commission:Late Payments Directive (recast)(8 Apr. 2009) [FR] [FR] [DE]
- European Investment Bank
- Irish Department of Enterprise, Trade and Employment
- Irish Department of Enterprise, Trade and EmploymentTánaiste Announces Earlier Payments for Business Suppliers to Central Departments(20 May 2009)
Business & Industry
- Irish Times:Government pledges to pay all suppliers within 15 days(May 20, 2009)
- Irish Times:New bank firms to deal with toxic loans(22 May 2009)