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For over 20 years we have engaged the services of Parfrey Murphy (Chartered Accountants) to act as the external payroll provider to our Irish (HQ) operation.... In that period I can attest to Carbery having received an excellent service.... We have no hesitation in recommending Parfrey Murphy as payroll service providers.
— Colm Leen, Carbery GroupSince 2006 we have outsourced our entire accounting function for our 3 locations in Ireland to Parfrey Murphy....We are delighted that we selected PM to carry out the above work.... They are extremely professional.... I would, without hesitation, recommend Parfrey Murphy to any potential outsourcing client.
— Jackie Gorman, HMS Host IrelandWe would like to thank Parfrey Murphy for providing us with invaluable information and assistance in the organisation of our tax returns...
— Dermot Harrington, RHM ArchitectureI first engaged Parfrey Murphy as my accountants in 2008. This has proven to be extremely helpful to my business. From carrying out my annual accounts and a number of other services during the year they have been both proficient and professional at all times
— Andrew Mackin, Mackin Consultancy
Late Payments Directive
An EU wide law to combat late payment in commercial transactions came into effect in the Republic of Ireland on 8 August 2002. Whilst the same regime applies throughout Europe, member states are allowed to vary the interest rate and compensation amount.
The European Communities (Late Payment in Commercial Transactions) Regulations 2002 implement the EU Law in Ireland and provide that penalty interest will become payable where the payments for commercial transactions are not met within 30 days, unless otherwise specified in a contract or agreement. Any commercial contract made under the law of another member state of the EU will have access to similar entitlements resulting from this legislation.
The Regulations will apply to commercial transactions in both the public and private sectors. However, there are some exceptions. These are:
- Debts that are subject to other laws, e.g. insolvency proceedings
- Claims for interest of less than €5
- Contracts that were agreed before 8 August 2002
Late payment after 30 days
The Regulations provide that interest shall be payable in respect of late payment. In addition, it will be an implied term of every contract that interest is payable if debts are not paid on time. A payment is regarded as late when 30 days have elapsed unless an alterative payment period is specified in an agreed contract. In the case of an agreed contract payment is regarded as late if the payment period exceeds the date or end of the period of payment specified in the contract. Where the contract does not specify a payment period a default payment period of 30 days will apply. This 30 day payment period begins on:
(a) The date of receipt by the purchaser of an invoice for payment or
(b) The date of receipt of the goods or services where:
- The date of receipt of the invoice is uncertain or
- The purchaser receives the invoice before the delivery of the goods or services in question.
In cases where the parties have agreed a procedure for acceptance or verification of the goods or services, the 30 day payment period starts after this process has been completed.
Interest rate
The interest rate chargeable for late payment is the European Central Bank (ECB) rate plus 7%. Parties to a contract may agree an alternative interest rate. The ECB rates in force on 1 January and 1 July apply for the following six months in each year. Only one rate will apply to a late payment which should be the rate in force on the payment date.
From the 1st July 2010 the annual interest rate currently applicable is 8% (i.e. the current ECB rate of 1%+ the margin 7%). That equals a daily rate of 0.022% which should be applied to late payments on a daily basis. The latest applicable late payment interest rate can be found at www.deti.ie.
Further information
Further information and a copy of the Regulations are available from www.deti.ie/enterprise/smes/latepay.htm. The site also contains practical tips on credit management and improved payment practices.
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Related Article: 6 Ways to Improve Your Cashflow
Please call Noel Murphy today on 021-4310266 if you need further information on late payments directive or a free consultation.
