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Late payer? You're losing out too

Lucy Alderson

As a journalist, it’s an important part of your job to tell the tough stories.

It could be someone opening up about how the pressure of delivering one project nearly made them take their own life.

It could be about how someone was forced to work as a slave on a construction site, threatened with violence or death if they attempted to escape by gangmasters.

There are tough stories everywhere, and this industry is no exception. But there’s one that sticks in my mind as particularly hard to listen to.

It involved the misery, anxiety and total panic subcontractors face when they are not paid on time, or at all.

In an interview with Osborne Communities managing director Nick Sterling last April, I listened while Mr Sterling told me the story of how he fell into depression 20 years ago.

In the 1990s, Mr Sterling owned his own business, carrying out a programme of hotel refurbishments across Europe.

On one job, the main contractor ran into problems on the project and didn’t get paid by the client. As a result, Mr Sterling was not paid and lost £300,000 overnight.

Mr Sterling told me the crippling effect this had on his mental health.

“It absolutely consumes all your thinking and you can’t sleep well. I had alopecia and a lot of my hair fell out. All your routines go out the window. You go insular, you go quiet and your behaviour becomes erratic.”

Listening to Mr Sterling’s story, I had a chilling realisation.

There will be thousands of people right now in exactly the same position he was in.

The truth is that the consequences of late payment snowball as you move down the supply chain.

Usually the smallest firms feel the biggest financial squeeze. Some may find themselves paying their staff’s wages off their own credit card when they haven’t been paid by the main contractor.

Constantly living on a knife edge and wondering whether you’ll be able to pay your workers from one day to the next is a situation many can’t – and wouldn’t want to – imagine.

So why does the industry operate on this practice?

Construction News has investigated further into this issue and we will be publishing our findings tomorrow.

Aside from the impact late payment has on the supply chain, this culture makes for an unsustainable business model for larger contractors.

After all, shoring up cash to keep the company afloat is simply a quick-fix solution for deep-rooted issues within a business.

Changing the main contracting model is the only solution to fixing what is a broken system.

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