Collecting Payment from the Republic of Ireland Post Brexit

If you regularly do business with the Republic of Ireland or even if you have just started to do business there and you are a small firm, there is a chance you will have experienced late payment problems at some time.

In a survey taken by Ireland’s ‘Small Firms Association’ (SFA) in 2014, 71% of companies based in Ireland have experienced late payment on their credit terms. Although there are no figures published regarding payments to the UK from Ireland, it would be safe to assume that it would be, at the very least, comparable.

Avine McNally of the SFA, said in 2014, that late payments in Ireland are compounding a difficult financial environment for many small firms.

"Getting paid on time is a never ending problem for most small businesses. Late payment causes serious cash flow problems; requires firms to extend overdraft facilities and consumes a great deal of management time. This in turn affects the ability of the business to compete, be profitable and grow."

In the previously mentioned ‘Late Payment Survey’ by the SFA in 2014, it was shown that:-

  • 56% of small firms offered credit terms of 30 days or less.
  • 71% of companies experienced late payments on those credit terms.
  • Average payment days in Ireland was 62.

When it came to Payment Terms, the survey revealed that 52% of companies had a written contract on payment terms with their customers and only 44% carried out credit checks on new customers.

Most surprising, according to the survey, was that only 10% of firms used debt collection agents to help with chasing payment.

The 'Late Payment in Commercial Transactions' amended by an EU Directive was transposed into Irish law in March 2013. This legislation allows companies to automatically charge interest penalties on accounts outstanding beyond 30 days. However, again according to the SFA survey, nearly 1 in 4 respondents were unaware of the legislation and just 8% had used the legislation to get any payments owed.

The reasons for this varied:-

  • 59% of firms were reluctant for fear of losing business.
  • 61% were reluctant because their customer was perceived too big to challenge.
  • 67% had concerns of gaining a reputation as being a 'difficult' supplier.

McNally highlighted that a frustration for many firms was that if they were unsuccessful in gaining payment through the late payment legislation, they would then have to pursue the outstanding debts through the court system.

"Irish companies have problems gaining access to court due to administrative backlogs, the lengthy delays in setting up court dates and the costs."

So that is how it is in the domestic Irish market, how then does this affect collecting payment from the UK?

There is a view that debtors in Ireland are aware of how to play the system and understand that the high cost of legal action is a buffer in delaying payments.

However EU legislation reminds us that no company is above the law when it comes to settling their debts, and companies in the UK, who do business in Ireland should in the first place make sure any contracts with Irish companies have payment terms that reflect EU legislation, with late penalty terms and third party recovery costs included.

If suffering from payment difficulties in Eire, it would definitely be advisable to instruct a Debt Collection firm with a presence actually in Ireland and not trying to solve the problem from the UK. As can be seen from the 2014 survey, Irish firms are not used to dealing with Debt Collection Agencies and EU payment Collection Legislation.

Town & Country Legal Services now have a physical presence in the Republic of Ireland. So if you are a UK based business with a business debt in the Republic it may no longer be so easy for the debtor to dismiss or delay payment. A physical presence in the Republic will enhance your chances of success.

Town & Country Legal Services now have experienced field agents in Debt Collection and Investigation, based in the Republic of Ireland who are prepared to travel throughout the Republic whenever and wherever it is cost effective to do so.

Post Brexit, to be seen to be professional and not a soft ‘touch’ when it comes to getting paid and using ‘Third Party Psychology’ when dealing with firms in Ireland is definitely the way to go when retrieving payments.

By Kevin Bishop - Senior Partner at Town and Country Legal Services LLP