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Late payments in construction up in 2015 as industry prepares for government clampdown

The scourge of late payments in the construction industry worsened in 2015, according to research from a leading trade credit insurer.

Euler Hermes found that the number of delayed payments in construction grew by 27 per cent year on year.

Construction accounted for nearly a third (31 per cent) of all incidents of late payments recorded in the survey, which covered 250,000 UK businesses, making it the worst sector for delays.

Payment delays were particularly bad in the last quarter of the year, with the three months to December seeing 12 per cent more late payments than July to September.

General contractors, civil engineering providers, and wiring and fittings installers were found to be the worst affected sub-sectors. The survey found that the latter group suffered in particular due to large projects running over budget.

Euler Homes UK head of risk underwriting Dirk Kotze said: “The growth in December’s output signalled a positive end to the year for UK construction, but some companies in the sector continue to grapple with the issue of low-margin legacy contracts, rising capital pressures and an increasing skills gap – all putting businesses and payment terms under pressure.”

The findings come as pressure grows on main contractors to reveal their payment terms and clamp down on late payments.

From next month, the government will force large companies to disclose payment terms, the average time they take to pay suppliers, and details of interest on late payment.

Meanwhile, Build UK has revealed plans to collect and publish contractors’ payment terms to allow them to benchmark performance against one another.

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