More needs to be done to ensure payments are made within terms, according to the National Specialist Contractors’ Council (NSCC).
The NSCC has published the results of a payment Survey carried out in partnership with the Federation of Master Builders (FMB), which shows that tier 2 sub-contractors are the net providers of trade credit within the construction industry, offering more trade credit to tier 1 contractors and clients than they receive from their own suppliers.
Credit Where Credit Isn’t Due features responses from 719 businesses with a collective turnover of £2.3 billion and reveals that 92% of NSCC and FMB members agree contractual payment terms with their clients of 45 days or less but only 57% of members actually receive payment within those terms.
When it comes to their own supply chains, NSCC and FMB members pay within terms more regularly, with 89% agreeing contractual payment terms of 45 days or less and 84% actually paying within those terms.
The abuse of retentions remains a significant problem says the NSCC.
At present, an estimated total of £439m is withheld in retentions from all NSCC and FMB members, 45% of which are overdue and 12.5% of which are written off as bad debts.
Speaking at the NSCC annual lunch on 26 November where the results were published, NSCC president Kevin Louch said: “We are still facing the all too familiar issue of late payment. If we are to successfully address this and other longstanding issues within our industry, there needs to be a major shift in how we operate.
“Throughout the supply chain we need to be on the same level talking the same language and then we can make this industry work for all of us.”