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IRELAND’S ECONOMY MAY be slowly be turning the corner, but Irish businesses are still finding it difficult to meet their obligations as they fall due.
Irish businesses are taking longer now to pay their bills than they were at this time last year, according to data published today by Experian, which said the average invoice being paid 27.55 days after being issued in the first half of this year.
By comparison, businesses in Northern Ireland were paying similar invoices around a week quicker.
The latest data indicates that the ‘payment performance’ of Irish companies is at its slowest now since November 2008, and that payment times hit a particular slump in March and April of this year.
Experian’s data also showed that the construction industry was the worst-performing sector in terms of meeting its obligations, with the average invoice going unpaid for 41.71 days, while the health sector was the quickest to pay at 14.46 days.
Businesses in county Kerry were the quickest to meet their obligations, taking 20.74 days, while those in Waterford took the longest – with the average invoice going unpaid for 43.35 days.
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Invoices are by their nature paid monthly, approx every 30 days. It is not a situation of payment made on receipt of invoice the day it arrives. That completely misses the point of an invoicing system and what’s more messes up the administrative management of the company accounts. Even long before the economic downturn it was fairly normal to wait 45 days for payment. Often you may have to wait up to 90 in some sectors, advertising and publishing for example. Often if invoices arrive after a monthly cheques run that invoice will routinely be held for the following month. This was and remains normal practice in many areas of commercial business. Outstanding invoices only really become worrisome when there is a significant change in payment behaviour pushing back payment two or mire months beyond what has been the payment behaviour to date. Once off arrangements are far better managed as COD as there is no need to set the vendor up as a recurring creditor. This involves a receipt not an invoice per se. Regardless the article does not suggest any major payment problems as far as I can see. In fact most seem to be paying invoices before they become due.
“It is well enough that people of the nation do not understand
our banking and monetary system, for if they did,
I believe there would be a revolution before tomorrow morning.”
-Henry Ford
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