It is sad to report that, despite the changes to the Construction Act which came into force in October 2011, little has changed for the better in terms of contractors paying promptly. In fact anecdotal evidence shows that there is a significant number of cases where the situation has even worsened.
Some statistics show that only around five per cent of specialist contractors are paid within 30 days. Even on public sector schemes where this period is written into the contract, it appears that only 44 per cent are being paid on time according to NSCC research.
The statistics however only tell half the story. When one actually speaks to the people involved at the receiving end of this unfair treatment the full horror becomes far more starkly evident. FPDC member companies, like so many SMEs, are very vulnerable to such huge payment delays and the cash flow disruption that follows, and then we start
to get right to the heart of the issue.
These companies are run by people, and very often whilst the contractor is a large corporate machine where people can be invisible, at our member level there is not usually that cushion. People’s homes are at stake, families are directly affected by these issues, and of course all the people employed in member companies have their jobs on the line too.
There is no doubt about it, representation has to be made and something has to be done. FPDC as a lone voice can only go so far (and rest assured we are making representations where we can on behalf of our members), so we are currently talking to various other interested bodies to see how we might be able to join forces and make our collective voice heard. We will of course keep members informed as we progress.
In the meantime members would do well to heed the advice offered by the government to businesses involved in public sector schemes, in cases where companies are signed up to the Prompt Payment Code.
• Agree payment terms before delivering orders
• Make use of supply chain finance schemes where available
• Raise complaints through legal channels where appropriate
• Use electronic invoicing where possible
If members are in any doubt or feel they have a cas that should be represented, they are encouraged to contact FPDC without delay and with as much factual detail as possible, in order that we can provide advice and support, and to take up the case on behalf of the membership when we gain access to the relevant bodies and individuals.
This issue is now high on the agenda and senior figures in our industry and within the government are acutely aware of it. Now is the time to strike whilst the iron is hot.