- Ireland’s small businesses are waiting an average of 38 days for payment from customers, longer than any other country surveyed
- Almost one in five are waiting 61 days and over for payment
- Two fifths say cashflow is a challenge for their business
Ireland’s SMEs are waiting the longest for payment from customers, according to the inaugural Global Business Monitor report from international business funder, Bibby Financial Services (BFS).
The global study surveyed business owners in the USA, Germany, UK, Poland, Hong Kong and Ireland and found that Irish SMEs wait an average of 38 days for payment. Findings reveal that business in Ireland wait longer than any other country surveyed and almost two weeks longer than their SME counterparts in the USA.
Almost half (45%) of SMEs in Ireland are paid after 30 days, and over one in ten (17%) are waiting twice as long – up to 61 days and over - for payment.
Bernard O’Hare, Managing Director of Bibby Financial Services Ireland said: “Late payment from customers is a significant issue for Irish SMEs. Lengthy payment times are having a negative multiplier effect on the economy, impacting supply chains and preventing businesses from growing.”
The research found that payment terms for SMEs vary dramatically between nations:
- In Hong Kong, SMEs wait an average of 37 days for payment
- In Poland, SMEs wait an average of 35 days
- In the UK, SMEs wait an average of 30 days
- In Germany, SMEs wait an average of 28 days
- In the USA, SMEs wait an average of 24 days for payment, almost two weeks quicker than Irish SMEs
Two fifths (39%) of Irish SMEs said that cashflow was an issue - equal highest in the study with U.S. businesses – and 41 per cent of respondents had suffered bad debt, where customers fail to pay in the past 12 months, with an average of €23,000 being written off.
Bernard O’Hare continued: “Our research shows that the country’s SMEs are under threat from poor payment practices and this is something that needs to be addressed if we’re to stimulate economic growth in the year ahead. While such payment practices can be catastrophic for small businesses if not carefully managed, a number of support measures are available.
“SMEs need to look at how they can protect their business from the negative effects of both late customer payment and writing off bad debt. As we embark on a year of great change, it’s clear that small businesses will need all available capital at their disposal to weather any potential storms.”
The research also found that four-fifths (82%) of Irish SMEs have concerns about the global economy, and very few see trading internationally as an opportunity, with less than one in ten (8%) stating that exporting is a growth opportunity for them at present. In total, just under a third (30%) of Irish SMEs are currently involved in exporting.
Bernard O’Hare concluded: “The current mood amongst small business owners in Ireland can be characterised as one of indecision and uncertainty. The UK’s decision to ‘Brexit’ is being felt not only in Britain, but within the UK’s strongest trading partners inside and outside of the EU – Ireland included.
“Brexit presents a strong impetus for Irish SMEs to look beyond the UK and increase trade with markets around Europe. With nine out of ten disregarding exporting as a growth opportunity, it will be those businesses who actively seek the opportunities that come with increasing your potential customer base that will steal a march in 2017.”
In July, BFS Ireland and the Strategic Banking Corporation of Ireland launched a €45 million lower-cost fund for Irish SMEs.
The Global Business Monitor is an international survey of over 1,200 small and medium sized businesses across the US, Republic of Ireland, United Kingdom, Germany, Poland and Hong Kong. Research was commissioned by Bibby Financial Services and carried out by Critical Research between 13 June and 21 July 2016.