Nearly a quarter of construction SMEs have had to wait more than four months for payment from clients or large contractors, according to new research from the Federation of Master Builders (FMB).
The UK-wide study into “cowboy clients” found fewer than a third are paid within the standard 30 days, with 30 per cent saying delays meant they had to delay payments to suppliers.
The survey claimed payment problems had also stymied economic growth, with a fifth of respondents stating that late payment had stopped them from having the confidence to grow their business.
The FMB found that 16 per cent of firms had to borrow to continue operations, while 8 per cent had almost gone out of business due to late payment.
Last week cladding specialist Lakesmere Group fell into administration with the loss of 109 jobs. CN understands that late payment was one of the contributing factors in the firm’s downfall.
The building envelope specialist worked for a number of the UK’s biggest projects including Crossrail and the Olympic Stadium.
FMB director of external affairs Sarah McMonagle said: “The worst type of cowboy client seeks to delay or withhold payment on spurious grounds, for instance by discovering make-believe faults.
“Nearly a quarter of construction SMEs have had to wait for more than four months for payment from a client or large contractor.
“Fewer than one third of builders are always paid within the standard period of 30 days and this is completely unacceptable.”
The FMB study follows on from a report by the Electrical Contractor’s Association (ECA) in August which found that nearly two in three SMEs had not been paid within 30 day terms by public sector clients, despite legislation compelling public bodies to do so.
According to government legislation – Regulation 113 of the Public Contracts Regulations 2015 – public sector clients must pay valid and undisputed invoices submitted by contractors within 30 days.