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Late payments still rife within supply chain

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.”

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