Galliford Try withheld payments to subcontractors in December to boost its end-of-year balance sheet, it has been alleged.
One Galliford Try subcontractor has claimed to be owed more than £100,000 for work carried out last October on a housing scheme in the North-west.
It is understood the subcontractor was told that payments would be withheld until 2015, after the close of Galliford Try’s financial half-year on 31 December.
The firm is on Galliford Try’s 45-day payment terms and was due to be paid in early December 2014.
It is now owed sums of “significant value” to the business after payment for other work carried out in November was also withheld, it was claimed.
The subcontractor, which was working directly for Galliford Try, is now having to use overdraft facilities to pay its own supply chain.
It is understood a payment approval was issued on 2 January 2015; however, the subcontractor had still not received payment as Construction News went to press.
Another subcontractor working on a project for Miller Construction, which was bought by Galliford Try in July, alleged to Construction News that Galliford Try had missed payment deadlines on its invoices in December.
The firm’s chief executive said the late payment “conveniently coincides with the close of the year figures and it reeks of a payment holiday. It’s any excuse to try to hold on to money a bit longer”, he claimed.
He said he had not received a response from Galliford Try when he enquired about the late payments, and that he had sent a seven-day stoppage warning to the contractor.
As Construction News went to press, the firm had received a payment notice from Galliford Try but had not yet received the money owed.
Galliford Try will report its half-year results for the six months to 31 December 2014 early this year.
A third subcontractor alleged that Galliford Try was withholding payments owed to it on a Miller Construction job. It told Construction News it would not tender for any new work with Galliford Try due to the contractor’s payment practices.
The allegations come after Galliford Try sent a letter to subcontractors working for Miller Construction in November 2014, seen by Construction News, warning of a period of “downtime” from 13 November to 28 November as Miller’s IT system was migrated to Galliford Try’s Oracle system in the wake of the firms’ merger.
A Galliford Try spokesman told Construction News on 4 December 2014 that the changeover had been completed successfully, but that there was “always a risk of encountering a technical issue”.
SEC Group chief executive Rudi Klein told Construction News that payments to “hundreds” of Miller subcontractors had still not been made by Galliford Try in the second half of December, before the Christmas shutdown.
He said he understood the sums owed by Galliford Try to be “in the hundreds of thousands”.
Professor Klein said “the least” Galliford Try could do would be to pay the statutory 8 per cent interest on delayed payments that its supply chain is entitled to claim on late payments.
On 6 January, when questioned about the allegations of delayed payments, the Galliford Try spokesman said: “Galliford Try continues to pursue positive relationships with its supply chain and subcontractors.
“Following the acquisition of the Miller Construction business a changeover of our integrated accounting and reporting systems was required which was completed successfully.
“During that period, we worked tirelessly to ensure that all payments were made to our supply chain in a timely manner.
“Despite our best efforts, we recognise that this major project may have impacted some members of our supply chain which we have worked hard to rectify.
“We would continue to urge any supplier or subcontractor who believes they are still currently experiencing issues to contact us directly so that we may assist them in resolving the situation.”