29th May Journal Column

Web-LogoBy Catriona Lingwood, Chief Executive of Constructing Excellence in the North East

Late payment is such a big issue in our industry, and one I feel is never ending. Finance is a huge problem for our industry and a one I don’t think we’ve taken seriously enough in the past.

But, the government are at it again with new plans to tackle the ever growing problem. Their new plans are said to include a future consultation on allowing bodies such as the Federation of Master Builders (FMB) to act on behalf of their members to challenge unfair payment terms.

Also mentioned is the creation of the new Small Business Conciliation Service (SBCS) which will be put in place to help resolve disputes between small businesses and their clients. The SBCS is based on an Australian system which, as far as I can tell, has been a success in getting small businesses the money they are owed.  The measure will form a part of a new Enterprise Bill, which was included in the Queen’s Speech earlier this week.

I still can’t believe the government has to go to such an extent to put several plans in place to ensure that people are given the money they are rightly owed, but this finally sounds like something that could actually work.

However, the success of the SBCS is likely to be dependent on SMEs referring late payment issues and disputes in the first place. This has been the case for the current plans put in place; SMEs are unwilling to refer their issues and disputes in fear of jeopardising their business relationships.

From April 2016, large businesses are going to be required to publish information about their payment practices twice a year before they can join or remain on supplier lists. It is expected that they will have to report on their standard payment terms, average time taken to pay, the proportion of invoices paid in 30 days or less, 60 days or less and beyond 60 days.

Along with these new plans, there will also be measures put in place to reinforce the plans already in place.

As of 2018, through a deal struck with the Construction Leadership Council, a voluntary charter has been created which will encourage clients and contractors alike to sign up to follow 11 fair payment commitments, including standard 30-day payment terms. When the charter was announced people questioned its impact due to the low number of signatories at first launch, with many commenting that without further supportive legislation there wouldn’t be a significant change.

Well, now the much needed supportive legislation is finally here, with plenty of plans in place to reinforce the need of paying on time, so we should finally see that change we so desperately need. There should never be a choice for fair payment to be an optional agreement, people deserve to be paid, and on time!