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Coming to terms with payment

Sometimes it takes an outsider to point out the blindingly obvious.

Like it or not, it seems that right down the supply chain, companies accept poor payment practices like they’re an irritating fact of life, alongside Monday mornings or the British weather.

But it doesn’t have to be this way.

Madani Sow from French giant Bouygues has an outsider’s view on the issue… And he thinks it’s crazy that firms don’t pay sooner.

“Main contractors should pay within one month,” he told delegates at the Construction Industry Summit in London last week. “Why don’t we have security of payment?”

A good question, but one which no one in the room seemed to have a decent answer for.

He continued to chastise his British audience.

“Contractors should keep 30 per cent of their turnover as cash but they don’t in the UK.

“At the time the contract is signed the job is in negative profit and therefore [it’s a] huge risk.”

Mr Sow’s incredulity at our payment culture was well timed.

Last week, a Construction News survey for software firm Textura found that more than one in three main contractor respondents take on average longer than 60 days to pay, with over a quarter of subcontractors admitting the same.

The problem is this culture seems endemic, which will come as no surprise to those subbies struggling to make ends meet despite a strong order book.

As the survey found, 34 per cent of main contractors wait longer than two months to get paid themselves.

So is no one to blame or is everyone?

Construction News would love to come up with the cure for this, but maybe that’s actually a job for government.

Readers' comments (1)

  • The government will never fix it, everyone in the supply chain has to take a stand by 30 day terms and then the culture will change.

    Eventually the employer and the banks are the ones who will have to buckle and pay earlier.

    This has worked for us as a subby so should work for others.

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