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Mace boss: Name and shame late-paying clients

Mace chief executive Mark Reynolds has called for late-paying clients to be named and shamed.

Mr Reynolds said accusations of poor payment had focused heavily on main contractors and their supply chains while ignoring how promptly clients pay contractors. 

He told Construction News the spotlight now had to turn on poor practices among clients if payment throughout the industry was to improve.

“The visibility is in the construction sector, but not in the client sector,” Mace’s CEO said.

“I think there needs to be, [with] clients paying contractors and consultants, complete transparency about their payment terms.

“Call them out and we can then say, ‘These are the good payers, these are the bad payers’, and after a while everyone will move up.”

Several tier one contractors have recently moved to highlight the payment practices of clients.

In recent weeks Laing O’Rourke’s chief executive Ray O’Rourke and Kier finance director Bev Dew have both accused clients, including the government, of having poor payment practices.

Improving payment throughout the supply chain was an obligation of everyone involved in the construction industry, Mr Reynolds said.

The Mace boss was talking to CN at the Construction Leadership Council briefing, at which new co-chair Andy Mitchell told CN he did not think many tier ones were delaying or “abusing” the payment system.

Earlier this year CN published analysis of average payment times for 19 of the 20 biggest contractors. It revealed that the average time to pay was 47 days, with Mace being slightly quick than the average at 45 days.

Mr Reynolds said taking a “magnifying glass” to the industry’s practices and publicising the data was a positive step that would lead to improvements.

“I think there are some positive things we’ve done and as a consequence of that we’ll start to improve, in the same way [as happened] with health and safety,” he said.

Poor payment has gained political traction in the wake of Carillion, whose 120-day payment terms were highlighted by the parliamentary inquiry into its collapse.

Firms signed up to such terms were able to access their money sooner through an early payment facility, which Mr Reynolds said he once supported.

He said: “I remember sitting in with clients, major clients, and saying, ’Carillion are fantastic, Carillion have got this payment protection system that says they will pay on 30 days if you […] give up two or three per cent for the benefit of getting your money early’. Well, that is absolutely wrong.”

Last month the Department for Business, Energy and Industrial Strategy launched a call for evidence on tackling late payments.

The department’s small business survey in May found construction companies were more frequently hit by late payments and were the most likely to report it as being a “major obstacle” to growth.

If you want to share your experience of late payment in confidence then please email david.price@emap.com or fill in our payment practices form below.

Readers' comments (3)

  • Well done Mr Reynolds for highlighting the final piece of the payment jigsaw - the client. The problem here though is that in looking for evidence this now has to come from the Tier 1 and Tier 2 contractors. The SME's who have been highlighting the payment problem at their end have no experience with those clients and therefore cannot provide evidence. For Tier 1 and Tier 2 contractors this is going to be harder to highlight anonymously, but we do need this information to identify where the problem starts and enable us all to move forward to better payment practices.
    Keep up the excellent work CN and keep asking the questions.

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  • and there we have it in black and white.
    the tier one contractors are failing at the first point in the supply network to professionally manage the client/contractor arrangements.
    this calls into question the skills of the management in tier one companies and more importantly the extraordinary over the top salaries paid to managers in tier one companies who are failing to manage the very beginning of the project.
    and the losers are the small and medium sized tier 2, 3, 4 etc suppliers in the supply network who get punished as the project progresses.
    and there we were thinking the tier ones had skilled managers who were worth their enormous pay packets.

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  • The likes of MACE should not be taking on work that they cannot fund. Decisions like that are down to Mr Reynolds and his counterparts at other tier 1s.
    The issues around payments from clients are probably more to do with how the payment mechanisms within the contracts work rather than late payment from clients. The common theme with most contracts is that you are paid once the job or certain elements of it are completed. The tier 1s are incapable of planning, managing, budgeting or delivering at project level so its no wonder they get into a mess at a corporate level and cash flow dries up whilst debt increases. They have not got away with blaming suppliers so now they are turning on their clients - they need to look closer to home.

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