Huge amounts of late payments still written off by subcontractors

NSCCA survey by the National Specialist Contractors Council (NSCC) has revealed that late payments are still a problem for around half of all subcontractors.

The industry survey, also conducted by the Federation of Master Builders (FMB), found that tier 2 and 3 contractors are effectively bankrolling the industry because they must pay their suppliers on time even though their clients are late.

In the most in depth survey into late payment since the uplift in construction activity, the construction trade bodies polled 719 firms, with a combined turnover of £3 billion.

Respondents to the survey reported they had written off £55 million of retentions payments as bad debt in the past year, and a further £177m of late payments had also been written off.



The survey also found over 40 per cent of firms were not being paid within their contracted terms.

It found 92 per cent of members of the NSCC and the Federation of Master Builders had agreed payment terms of 45 days or less, but only 57 per cent were actually paid within these terms.

It found 41 per cent of firms were given no reason, or a spurious reason, for retentions money being withheld.

Suzannah Nichols, chief executive of the NSCC, said: “It is the specialist contractors and SMEs that solve the industry’s problems, innovate, reduce programme times and train the next generation.



“But firms are struggling to invest in future development because of late payment.”

She added: “There is a big positive from these findings. Most firms now have contractual payment terms of 45 days. This means we now have widespread recognition of the need to improve payment terms, the challenge is to get firms to deliver.”

The new Construction Supply Chain Payment Charter, being promoted by the UK Government, maintains the commitment to payment within 30 days on public sector projects and specifies payment within 45 days on private sector projects by next June. The target is to move to 30 days on private work from January 2018.

Nichols added: “This research shows it is not such a big ask to get clients and main contractors to agree to 30 days by 2018.”



She added that the abuse of retentions remains a significant problem.


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