Businessmen have once again spoken out about the delays in payments received from the government for products or services rendered.

During a presentation to the media last week, they insisted that late payments are a substantial problem for them and that an agreement reached with the government that payment should be made within the first 150 days is undermining their competitiveness because it is reducing their cash-flow – especially when the 150 days go by and no payment is received anyway.

It is not the first time that such a complaint has been raised. Recently, it was the pharmaceutical industry that lifted the lid on the issue, saying that it could no longer tolerate the fact that the government takes much longer than the established timeframe to pay its dues. Now, all businessmen have spoken up on the matter.

Considering that 150 days is already quite a long period in business terms – nearly half a year – the government should do its best to honour its commitments. Its failure to pay up on time is negatively affecting local businesses, many of whom have the government as their biggest client or one of their main clients. Having no money with which to import items or else having to pay interest on items purchased from abroad for the government is a situation that is untenable.

At a time when the recession is hitting local industry and local consumption, the last thing that entrepreneurs need is to be short of cash that could literally stop their business. They need the money to maintain the flow of business, and any setback could hit them hard.

They will welcome the news that the European Union is suggesting that the 150-day timeframe in drastically brought down to 30 days, otherwise debtors would face interest. The aim is to reduce problems related to late payments.

Yet, if the government is unable to pay up within 150 days and beyond, how is it going to be possible that it settles its dues in one-fifth of the time? And if it cannot pay up its net sum, how is it going to be able to pay interest? Will the debt just keep on accumulating as the national debt is doing?

The entrepreneurs themselves are rather sceptical about this proposal, as their main concern is to get paid, not to receive interest. “We cannot supply and not get paid,” Reginald Fava, chairman of the Importers, Distributors and Retailers Economic Group said.

And he is right.

There is another side of the coin however. And this is that often it is the businessmen themselves who fail to pay up their dues to the government, in terms of income tax and national insurance contributions deducted from their employees’ salaries, as well as Value Added Tax.

Just as much as entrepreneurs expect the government to pay what it owes them, so should the entrepreneurs pay what they owe to the government.

It seems that it is a vicious circle. The government does not pay up, and in turn the entrepreneurs do not pay up.

Seeing all this, it was in a way heartening to hear the Prime Minister say that the government is seeking a permanent solution. In an interview last Sunday, Dr Lawrence Gonzi said that he had instructed Finance Minister Tonio Fenech to seek a form of agreement with entrepreneurs in the form of a set-off – if the government is owed e100 from an entrepreneur who is himself owed e100 from the government, the two debts will cancel each other out.

It is, really, a simple exercise that will go a long way to help sort things out. Naturally, the less bureaucracy there is, the better.