Late payment……..The time is right for radical reform?
In this blog we talk about unfair payment practices which can impact any business in the construction industry, however the impact is greatest on the smaller businesses and sub-contractors who don’t have dedicated credit controllers, or the time and resources, to do something about them.
Late payment of invoices
Sub-contractors in the construction and engineering industry are too often impacted by poor payment practices, namely abuse of retentions and late payment of invoices.
The abuse of retentions is becoming a big enough issue that MP Peter Aldous introduced a bill calling on the government to introduce new legislative proposals to put retentions in deposit protection schemes. Following the collapse of Carillion, there is growing support for reform in the payment practices within the construction industry.
Bryan Berry, the Chief Executive of the Federation of Master Builders, recognises the need for enormous change in an industry where “poor payment practices, including the abuse of retentions, have been accepted as standard … for too long. Retentions themselves, because of the difficulty in chasing them, are themselves too often written off as bad debt and this situation needs to change. The time is right for radical reform.”
Within the industry
Within the construction industry:
• Between 2013 and 2017, over £700m worth of retention was lost and 44% of contractors suffered non-payment due to upstream insolvency
• Sub-contractors and small businesses wrote off £2.8bn last year
• On average £16,149 is written off per firm
• Average wait for late payments is up to 44 days, with over ¼ waiting 55 days
Unfair payment practices can impact any business in the construction industry, however the impact is greatest on the smaller businesses and sub-contractors who don’t have dedicated credit controllers, or the time and resources, to do something about them.
We talk about some practical steps you can take to reduce the number of days it takes to get paid, as well as the support we could offer you here:
We understand that sometimes things in business happen and there might be a genuine reason as to why your customers have been unable to pay for services rendered. Sometimes, once you take the time to ascertain why they cannot pay, the solution is easily fixed. The appropriate steps can be taken. For a helping hand reconnecting with your customers and getting back on track, get in touch with us today on 0800 953 3631 or visit our website and start a chat session with one of our Business Development team.