Clearview National January 2015 - Issue 158 | Page 74

businessnews

Late Payment Still
Plagues Half Of All
Subcontractors
Late payment is still rife within the supply
chain with more than four in ten specialist
contractors and small builders suffering
delays, according to a new industry survey.
»»Despite Government efforts
to clampdown on the problem, tier two
and three contractors are still being left to
effectively bankroll the industry because they
must pay their suppliers on time even though
their clients are late.
Construction trade bodies, the
National Specialist Contractors Council
and Federation of Master Builders, have
conducted the most in depth survey into
late payment since the uplift in construction
activity.
Late payment and the abuse of cash
retentions remains a serious issue for
the whole industry even with recovering
workloads and a backdrop of specialist
contractors gaining the upper hand in what
work they take on.
The survey of over 700 firms found 92%
had contractual terms of 45 days, but just
57% were actually paid on time.

Charging interest on late
payment in accordance with the
Late Payment of Commercial
Debts Regulations is currently
not perceived as an effective
mechanism with only 5% of
firms resorting to using it for late
payments.
The survey also found that firms were on
average having to write off 12% of withheld
cash retentions as bad debt.
Taken together, bad debt now equates to an
average 1% of turnover, which amounted to a
loss of £177m to NSCC and FMB members
in the financial year.
Suzannah Nichols, chief executive of
the NSCC, said: “Firms are struggling to
invest in future development because of late
payment.”
She added: “There is a big positive
from these findings. Most firms now have

‘just 52% were actually
paid on time’
contractual payment terms of 45 days. This
means we now have widespread recognition
of the need to improve payment terms, the
challenge is to get firms to deliver.”
The new Construction Supply Chain
Payment Charter, being promoted by
Government, maintains the commitment
to payment within 30 days on public sector
projects and spe