December 14, 2018

Nine months after Carillion, fair payment is still a dream for SMEs

The National Federation of Builders (NFB) has drawn attention to the failures of large contractors when it comes to fair payments, particularly after Build UK published payment performance figures of its top member companies.

Despite being signed up to the Prompt Payment Code, where signatories pledge to pay 95% of their invoices within 60 days, Kier took 61 days or longer to pay more than a third of its subcontractors in the first half of 2018. In addition, the figures report that Kier had 48% of invoices “due but not paid within agreed terms”.

Kier has come under increased criticism for its payment performance and the use of an early payment facility, allowing subcontractors to opt for reduced payment sums in exchange for quicker repayment times.

Haydn Mursell, chief executive of Kier, said: “At the moment our average payment terms to our supply chain is 54 days. [Our] payment is quicker on average than the client pays us. So we’re already paying our supply chain quicker than our clients pay us – so we’re doing our bit for the industry in that regard.”

Kier appears to be asking for a pat on the back for not practicing ‘pay when paid.’ This is a legal requirement, not something to be claiming credit for.

Neil Walters, national chair of the NFB, said: “Build UK said that transparency was a bold first step in changing the way the industry is held back, yet Mursell’s words shows that large contractors are still not taking late payment seriously. The Government should be clear that companies who fail to fulfil their pledge under the Prompt Payment Code should be ejected from this scheme.

“Forcing SMEs and regional contractors to choose between quicker payment times and the full amount of money owed for their work is holding the industry back. Nine months after Carillion, fair payment is still a dream for SMEs.”