Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Late payment is a great shame on construction

Late payment is hardly new, but in difficult times it can tip hard-pressed contractors over the edge. Construction minister Michael Fallon has been emphasising how important he believes it is for contractors to be paid on time, making it one of the central messages of his tenure so far.

Speaking to CN in his first interview as construction minister in October last year, he insisted all major contractors should sign up to the government’s prompt payment code, and he’s since made it clear he’s not going to give up on the issue. Timely, reliable payment is for the good of the whole industry.

When it comes to late payment, the focus is often on highlighting good practice among clients and main contractors that pay promptly, or naming and shaming those that don’t. Over the past five years, the National Specialist Contractors Council has made huge inroads in highlighting the issue and equipping its members to deal with it through its Fair Payment campaign – but sadly the need for the campaign continues.

As our late payment SME Spotlight special highlights, there are also measures that subcontractors and SMEs can take themselves to minimise the chances of them being paid late – and to mitigate the consequences if they are.

Crofton Design director Steve Hale says SMEs should, where possible, keep enough money on their balance sheets to minimise the risk – although he accepts this is not easy after four years of recession.

Barclays Business banking MD Sue Hayes insists there are ways that businesses can stand up to late payers. It may not be easy to refuse to work for repeat offenders, and of course it doesn’t excuse their behaviour, but if all 250,000-odd construction SMEs stood together, they would send a pretty powerful message. Clients and main contractors know full well they can’t survive without their supply chains; the best wouldn’t dream of treating them badly.

Our Spotlight also sees Andrew Weston and John Crowley from law firm Taylor Wessing give their tips for SMEs to ensure they know their rights, while Peter Vinden of SME advisory company the Vinden Partnership sets out how best businesses can protect themselves. 

Late payment brings stress, recriminations and directly or indirectly can lead to insolvency and unemployment. It’s a great shame for the industry – in every sense of the word.

Readers' comments (1)

  • StreetwiseSubbie

    The matter of “late payments”, the huge numbers of failing businesses, and the unfair treatment of Specialist Contractors is both a very real, and a very serious issue.

    The vast majority of the 5,500 plus construction related businesses which have been closed due to insolvency over the last few years are Specialist Contractors. Conversely, during the same period, the profitability of Contractors generally has improved.

    Evidence of payment abuse is provided by our most recent survey of over 200 Specialist Contractors. The full survey results are available on our web site.

    Payment abuse in the construction industry is undermining any attempt to kick start the economy by spending public money on infrastructure, and our evidence highlights the fact that the money is finding its way on to corporate balance sheets rather than passing through the supply chain and in to the wider economy.

    Payment abuse is affecting the Government’s pledges for more innovation and greener construction.

    The firms at the sharp end of innovation in the industry are the Specialist Contractors, but how can they be expected to deliver innovation when they have to constantly deal with the pressures of not getting paid, and their businesses and home lives are falling apart around them?

    Unsuitable or offensive? Report this comment

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.