Prompt Payment of Accounts Act, 1997 Tánaiste announces increase in Interest Rate on Late Payments

Ms. Mary Harney, TD, Tánaiste and Minister for Enterprise, Trade and Employment, today (Friday 8th December 2000) announced that, following consultation with the Minister for Finance, she had made an Order, revising the interest rate that will be applied to late payments under the terms of the Prompt Payment of Accounts Act, 1997. The revision reflects increases in bank interest rates over the last year. The new rate, in common with the previous rate, is set at around 1.5% per annum higher than prevailing AA overdraft rates.

The Tánaiste said, "this new interest rate should ensure adequate compensation to suppliers in the event of late payments by Public Bodies and should act as a punitive deterrent to late payment by those organisations".

The new rate, which will become effective from 2 January 2001, will be 0.0294% in respect of each day payment remains overdue. This equates with an annual rate of 10.74% (the previous rate was 0.0274% per day, which equated with an annual rate of 10% and had been in effect from 6 April 1999).

The Prompt Payment of Accounts Act, 1997, applies to all Public Bodies and to contractors on public sector contracts. Under the terms of the Act, payment must be made to suppliers on or before the date on which payment is due under the terms of a written contract. If there is no written contract, payment must be made within 45 days of receipt of the invoice or delivery of the goods or services, whichever is the later. Where bodies fail to pay on time, they are required to compensate the suppliers affected by the delay, by paying interest on the outstanding amounts.

The Tánaiste said, "new legislation is also being prepared which will ensure that the principle of prompt payment of bills will apply to both public bodies and private sector firms. This new legislation will reflect the outcome of EU level agreement on the Community-wide harmonisation of provisions on payment periods, due dates and the statutory interest rate". The Tánaiste added, "that the process for the introduction of this new legislation is now underway".