Minister for Small Business at the Department of Jobs, Enterprise and
Innovation, John Perry, T.D., today (Monday) announced agreement for the
text of a Code of Conduct on Prompt Payments aimed at improving cash flow
between businesses. The Code of Conduct is being developed by the Business
Representative Bodies in Ireland with the support of the Department of
Jobs, Enterprise and Innovation.
Small and Medium Sized-businesses are at the core of the Government’s plan
for jobs and growth. Employing over 650,000 people and contributing
€10billion in taxes to the Exchequer every year, they are the backbone of
the economy. However, the economic crisis has presented significant
challenges across enterprise in Ireland, but for SMEs in particular the
issue of late payments is of critical concern. Late payments in commercial
transactions have an adverse effect on businesses by straining cash flow,
adding financial costs and fuelling uncertainly for many businesses.
Therefore, the development and introduction of a Code of Conduct on Prompt
Payments is an important step in addressing the culture of late payments in
Ireland. The introduction of this Code will continue the Government’s drive
to get credit flowing in the Irish economy by encouraging prompt payment
for all business transactions.
Given the importance the Government attaches to the issue, this initiative
has been included in the Action Plan for Jobs 2013.
The Action Plan highlights the increased emphasis globally on sustainable
production. Companies that demonstrate a commitment to responsible
business practices are achieving competitive advantage in the market place.
The Government is supportive of initiatives by the business sector to
promote corporate social responsibility and of the recent development of a
recognised standard in Ireland for Business Working Responsibly.
Signatories to the Code will undertake to:
· Pay suppliers on time, within the terms of contract and in accordance
with legislation;
· Give clear guidance to suppliers on payment procedure; and
· Encourage good practice by promoting adoption of the Code.
Speaking on the introduction of the agreed text for the Code, Minister for
Small Business, John Perry T.D. said:
“The Irish Government is acutely aware of the importance of the small
business sector, its potential for generating employment and the many
issues currently facing SME’s in Ireland, including the issue of prompt
payments.
“Companies providing goods and services need cash flow certainty and are
entitled to expect that their payments will be made in a timely manner.
For our valued SME’s any disruption to cash flow can mean the difference
between solvency and bankruptcy. Such insolvencies lead to job losses and
can be a personal tragedy for the individuals involved. It is important
that we put steps in place to stop this waste now”.
In recognition of the importance the Government attaches to the issue of
prompt payments and in an effort to help ease cash flow difficulties for
Irish small businesses, the 15 day prompt payment requirement for all
central Government Departments was extended in 2011 to include the State
Agency Sector.
Minister Perry added “I believe the publication of a Code of Conduct on
Prompt Payments combined with the recent implementation of the Late Payment
Directive and the 15 day prompt payment arrangement for the Public Sector,
will represent significant progress on the issue of prompt payments in
Ireland in 2013”.
Also, commenting on the Code, Mark Fielding, Chief Executive Officer, ISME,
who as part of the group of Business Representative Bodies tasked with the
development of the Code, said:
“This is an extremely important initiative between Government and business.
We look forward to all businesses, large and small, leading by example in
subscribing to the Code, on what's an extremely important issue for Irish
SMEs."
ENDS
For further information please contact:
Press Office, Department of Jobs, Enterprise and Innovation:
press.office@djei.ie, Ph: 01-6312200
Note for Editors:
Click here for more details on the EU Late Payment Directive and the 15 day
prompt payment arrangement: Late Payment Information
The Department of Jobs, Enterprise and Innovation will now work with the
various Business Representative Bodies to develop an online portal to host
the Code of Conduct on Prompt Payments.
Find below: Text of Code of Conduct on Prompt Payments
Annex:
Code of Conduct on Prompt Payments for Business
As code signatories, we undertake to:
Pay suppliers on time
§ within the terms agreed at the outset of the contract, or 30 days, in
accordance with legislation The legislation that currently applies is
the European Communities (Late Payment in Commercial Transactions)
Regulations 2012 (S.I. No. 580 of 2012). This statutory instrument
gives effect to Directive 2011/7/EU on Combating Late Payment in
Commercial Transactions.
§ without attempting to change payment terms retrospectively
§ without changing practice on length of payment for smaller companies on
unreasonable grounds
Give clear guidance to suppliers
§ providing suppliers with clear and easily accessible guidance on
payment procedures
§ ensuring there is a system for dealing with complaints and disputes
which is communicated to suppliers
§ advising them promptly if there is any reason why an invoice will not
be paid to the agreed terms
Encourage good practice
§ by requesting that lead suppliers encourage adoption of the code
throughout their own supply chains
Charter Signatories
IHBMA
ISME
SFA