- ISME has received a complaint from a member company concerning late payments by some HSE Hospital Groups.
- Company is effectively funding the health service from their own money.
- Revenue has rescinded company’s tax clearance certificate, meaning they cannot transact business with Government agencies.
- SMEs lack the working captial to finance tardy cashflow management by State entities.
- As we enter a period uncertainty, it is imperative for State bodies to support the viability of the SME base; not the other way around.
ISME has received a complaint from a member company concerning late invoice payments by some HSE Hospital Groups.
They are encountering significant difficulty in getting paid on time. This is affecting their ability to pay their creditors, (including ISME and the Revenue). They pay their VAT on an invoice basis, meaning they are funding a negative cashflow with the health service from their own working capital.
The cash owing to this business from various Hospital Groups in excess of 60 days amounts to some €44,000. This has produced a €20,000 hole in the company’s bank account, resulting in a failure to pay their VAT. This has in turn resulted in the Revenue rescinding their tax clearance certificate, which is essential for them in transacting business with Government agencies.
It is imperative that state services do not attempt to manage their cashflows by leaning on the trade. Small enterprises in particular lack the working capital required to finance tardy cashflow management by State entities.
Should it emerge that debtor days in excess of 30 days is becoming standard practice within the health service, small businesses trading with it will have to adjust their working capital management accordingly.
- Advise businesses trading with the HSE to rigidly apply Late Payment Interest of 8% for debtor days in excess of contract.
- Ask Minister Donohoe to raise the qualifying ‘cash receipts basis threshold’ for VAT from the current €2m to €3m, per the current Value Added Tax Strategy Group report of July 2019.
- Advise member companies below the current threshold to apply to the Revenue to pay VAT on a cash receipts basis (if they are not already doing so).
As we enter a period of political and economic uncertainty, it is imperative for State bodies to support the viability of the small and medium enterprise base; not the other way around. Failure to do so not only threatens small businesses, it undermines employment in the indigenous economy, and weakens the Exchequer’s tax base.
ISME has written to Minister Simon Harris and asked him to address the matter with the HSE as a matter of urgency.
ISME should be referred to as the Irish SME Association
For further information, please contact ISME offices T: 01 6622755 E: [email protected]