15 Day Prompt Payment Agreement
Back in 2009, in an effort to help ease cash flow difficulties for Irish small businesses, Ireland introduced, on a voluntary basis A 15 days prompt payment requirement for all central Government Departments to pay their business suppliers within 15 days of receipt of a valid invoice. This arrangement applies to all valid invoices received on or after 15 June 2009.
This voluntary 15 day prompt payment rule was extended beyond central Government Departments and in 2011 was rolled out to the Health Service Executive, the Local Authorities, State Agencies and all other Public Sector Bodies (with the exception of Commercial Semi-State bodies). These new arrangements apply in respect of valid invoices received on or after 1 July 2011.
Individual bodies covered by this Government Decision are required to publish their own quarterly reports on their respective websites and to submit detailed quarterly reports to their parent Department. In turn, each parent Department is also required to publish quarterly composite reports covering those bodies under their aegis. As part of this Government Decision, Central Government Departments are required to report quarterly to the Department of Business, Enterprise and Innovation on their performance in meeting targets.
In 2015, the then Minister for Business and Employment welcomed the findings of the latest set of quarterly figures, specific to the Government Departments and the Agencies under the remit of the Department of Business, Enterprise and Innovation, 93% of payments made by Government Departments, valued at €622m, were paid to suppliers within 15 days.
The high level of payments made within 15 days clearly demonstrates that the initiatives introduced by Government to improve payment times are working. In addition to the 15 day prompt payment rule, a new late payment initiative - the Prompt Payment Code (PPC), was recently introduced and is aimed at improving cash flow for businesses and ultimately, driving a change in Ireland's payment culture. Government is leading by example and has ensured that all Government Departments, their Agencies and Public Sector Bodies sign up to the Code. The PPC has been developed by business for business and it is therefore vital that it is supported by business. Organisations can play their part by signing up to the Code through the online portal www.promptpayment.ie.
As the 15 day prompt payment rule is a voluntary practice no penalty applies in cases where payments are made outside of the 15 day administrative period and within the 30 day statutory period. The 15 day prompt payment rule only applies to transactions between business and Government Departments/Public Service bodies and does not apply to business-to-business contracts where contractual arrangements continue to determine payment periods and be subject to late payment interest legislation.
Sign up to the Prompt Payment Code today