Construction vendors suffer payment delays

19 February 2009

19 February 2009 | Andy Allen

Suppliers to the construction industry are facing a sharp rise in delayed payments despite repeated government calls for buyers to pay on time.

The latest state of trade survey by the National Specialist Contractors Council (NSCC), which has around 7,000 members, found that in the last quarter of 2008 only 2 per cent of suppliers were paid within 30 days.

The NSCC also reported a significant increase in vendors reporting payment periods of more than 60 days - 41 per cent compared with 27 per cent in the previous quarter.

This is in spite of the government's "Fair Payment Charter" introduced in January 2008, which requires payment within 30 days on all projects in the public sector. Public sector projects account for almost 40 per cent of construction work in the UK.

Prime Minister Gordon Brown also launched a "Prompt Payment Code" last year calling on businesses to stick to the terms of a contract and not to alter billing periods (Web news, 11 December 2008).

In addition, the NSCC survey showed no improvement in the number of enquiries or the number of orders being received by specialist contractors.

The NSCC report said: "Low levels of enquiries and orders combined with decreasing tender prices are putting further downward pressure on margins. Only a third of specialist contractors are now working at over 90 per cent capacity, the lowest level of activity reported by the specialist sector since 1998."

SMfeb2009

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