More needs to be done to ensure payments are made within terms, according to the National Specialist Contractors’ Council (NSCC).
The results of Credit Where Credit Isn’t Due - its payment survey carried out in partnership with the Federation of Master Builders (FMB) - showed that tier 2 subcontractors were the net providers of trade credit within the construction industry, offering more trade credit to tier 1 contractors and clients than they received from their suppliers.
Featuring responses from 719 businesses with a collective turnover of £2.3bn, the report revealed 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% 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, 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 long-standing issues, 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.”