The causes of late payment in construction - Revision history

Editor at 12:15, 9 December 2021

2021-12-09T12:15:41Z

← Older revision		Revision as of 12:15, 9 December 2021
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	* They may prefer the smaller contractor, their supplier, to bear the burden of providing finance rather than incurring bank or borrowing charges themselves.		* They may prefer the smaller contractor, their supplier, to bear the burden of providing finance rather than incurring bank or borrowing charges themselves.

−	Not one of these reasons is palatable or equitable. The government has taken steps to reduce the scourge of late payment, especially with regards to the last possibility, by placing a 'duty to report' payment terms on large companies. However, this only deals with the very largest of UK ventures that have perhaps historically exploited their size and negotiating power. The problem of late payment is endemic throughout many lower tiers of venture. Businesses, and ~~SME’s~~ in particular, need to become more vigilant and sophisticated in discerning those who can’t pay or those that won’t pay.	+	Not one of these reasons is palatable or equitable. The government has taken steps to reduce the scourge of late payment, especially with regards to the last possibility, by placing a 'duty to report' payment terms on large companies. However, this only deals with the very largest of UK ventures that have perhaps historically exploited their size and negotiating power. The problem of late payment is endemic throughout many lower tiers of venture. Businesses, and SMEs in particular, need to become more vigilant and sophisticated in discerning those who can’t pay or those that won’t pay.

	= The risks =		= The risks =

−	Last year Lloyds Bank reported that UK ~~SME’s~~ are owed (this number – it is not a typo) £586 billion in unpaid invoices (source: Business in Britain, Lloyds Commercial Banking, 24th October 2016). In April 2017, the Zurich SME Risk Index suggested that ~~SME’s~~ are owed an estimated £44.6 billion in late payments. These are breath-taking figures.	+	Last year Lloyds Bank reported that UK SMEs are owed (this number – it is not a typo) £586 billion in unpaid invoices (source: Business in Britain, Lloyds Commercial Banking, 24th October 2016). In April 2017, the Zurich SME Risk Index suggested that SMEs are owed an estimated £44.6 billion in late payments. These are breath-taking figures.

	The UK construction industry is a vital foundation of our nation and economy. It is responsible for 7% of GDP and employs approximately 10% of the workforce. A staggering 20% of all UK businesses are construction related. Including businesses that are VAT registered or have employees, there are c. 300,000 businesses. The number of construction related ventures increases to 980,000 if you include sole traders.		The UK construction industry is a vital foundation of our nation and economy. It is responsible for 7% of GDP and employs approximately 10% of the workforce. A staggering 20% of all UK businesses are construction related. Including businesses that are VAT registered or have employees, there are c. 300,000 businesses. The number of construction related ventures increases to 980,000 if you include sole traders.
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	This article was created by --[[User:TenderSpace\|TenderSpace]], whose [https://www.thetenderspace.com/toolbox/finance-checker Finance Checker], developed in conjunction with CreditSafe, offers critical decision making information and live updates on possibly detrimental financial changes.		This article was created by --[[User:TenderSpace\|TenderSpace]], whose [https://www.thetenderspace.com/toolbox/finance-checker Finance Checker], developed in conjunction with CreditSafe, offers critical decision making information and live updates on possibly detrimental financial changes.

−	= Related articles on Designing Buildings ~~Wiki~~ =	+	= Related articles on Designing Buildings =

	* 37% of SMEs suffer mental health problems due to pay issues.		* 37% of SMEs suffer mental health problems due to pay issues.
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	* Project bank accounts.		* Project bank accounts.
	* Prompt payment code.		* Prompt payment code.
		+	* Prompt Payment Code boosted to help SMEs.
	* Scheme for construction contracts.		* Scheme for construction contracts.
	* Small Business, Enterprise and Employment Bill.		* Small Business, Enterprise and Employment Bill.

	[[Category:DCN_Commentary]] [[Category:DCN_Guidance]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]		[[Category:DCN_Commentary]] [[Category:DCN_Guidance]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]

5.64.90.79 at 14:28, 3 December 2020

2020-12-03T14:28:18Z

← Older revision		Revision as of 14:28, 3 December 2020
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	* They may prefer the smaller contractor, their supplier, to bear the burden of providing finance rather than incurring bank or borrowing charges themselves.		* They may prefer the smaller contractor, their supplier, to bear the burden of providing finance rather than incurring bank or borrowing charges themselves.

−	Not one of these reasons is palatable or equitable. The government has taken steps to reduce the scourge of late payment, especially with regards to the last possibility, by placing a 'duty to report' payment terms on large companies. However, this only deals with the very largest of UK ventures that have perhaps historically exploited their size and negotiating power. The problem of ~~pate~~ payment is endemic throughout many lower tiers of venture. Businesses, and SME’s in particular, need to become more vigilant and sophisticated in discerning those who can’t pay or those that won’t pay.	+	Not one of these reasons is palatable or equitable. The government has taken steps to reduce the scourge of late payment, especially with regards to the last possibility, by placing a 'duty to report' payment terms on large companies. However, this only deals with the very largest of UK ventures that have perhaps historically exploited their size and negotiating power. The problem of late payment is endemic throughout many lower tiers of venture. Businesses, and SME’s in particular, need to become more vigilant and sophisticated in discerning those who can’t pay or those that won’t pay.

	= The risks =		= The risks =

Designing Buildings at 09:19, 27 October 2020

2020-10-27T09:19:34Z

← Older revision		Revision as of 09:19, 27 October 2020
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	* Small Business, Enterprise and Employment Bill.		* Small Business, Enterprise and Employment Bill.

−	[[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]	+	[[Category:DCN_Commentary]] [[Category:DCN_Guidance]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]

Designing Buildings at 09:24, 4 March 2020

2020-03-04T09:24:27Z

← Older revision		Revision as of 09:24, 4 March 2020
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	= Related articles on Designing Buildings Wiki =		= Related articles on Designing Buildings Wiki =

		+	* 37% of SMEs suffer mental health problems due to pay issues.
	* Causes of construction disputes.		* Causes of construction disputes.
	* Construction invoice fraud.		* Construction invoice fraud.

Editor at 12:15, 24 July 2019

2019-07-24T12:15:34Z

← Older revision		Revision as of 12:15, 24 July 2019
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	This article was created by --[[User:TenderSpace\|TenderSpace]], whose [https://www.thetenderspace.com/toolbox/finance-checker Finance Checker], developed in conjunction with CreditSafe, offers critical decision making information and live updates on possibly detrimental financial changes.		This article was created by --[[User:TenderSpace\|TenderSpace]], whose [https://www.thetenderspace.com/toolbox/finance-checker Finance Checker], developed in conjunction with CreditSafe, offers critical decision making information and live updates on possibly detrimental financial changes.

−	~~= Find out more =~~	+	= Related articles on Designing Buildings Wiki =
−		+
−	=== Related articles on Designing Buildings Wiki ===	+

	* Causes of construction disputes.		* Causes of construction disputes.
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	* Payments to nominated sub-contractors.		* Payments to nominated sub-contractors.
	* Pay less notice.		* Pay less notice.
		+	* Progress on poor payment practices.
	* Project bank accounts.		* Project bank accounts.
	* Prompt payment code.		* Prompt payment code.

Designing Buildings: Reverted edits by 94.241.146.184 (talk) to last revision by Editor

2018-10-13T09:42:14Z

Reverted edits by 94.241.146.184 (talk) to last revision by Editor

← Older revision		Revision as of 09:42, 13 October 2018
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	* Small Business, Enterprise and Employment Bill.		* Small Business, Enterprise and Employment Bill.

−	~~[[Category:Articles_needing_more_work]]~~ [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]	+	[[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]

94.241.146.184 at 18:33, 12 October 2018

2018-10-12T18:33:16Z

← Older revision		Revision as of 18:33, 12 October 2018
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	* Small Business, Enterprise and Employment Bill.		* Small Business, Enterprise and Employment Bill.

−	[[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]	+	[[Category:Articles_needing_more_work]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]

Editor at 14:06, 26 March 2018

2018-03-26T14:06:42Z

← Older revision		Revision as of 14:06, 26 March 2018
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	* Insolvency.		* Insolvency.
	* Late payment.		* Late payment.
		+	* Main contractor’s discount.
	* The Late Payment of Commercial Debts Regulations 2013.		* The Late Payment of Commercial Debts Regulations 2013.
	* Payment.		* Payment.

Editor at 14:42, 4 January 2018

2018-01-04T14:42:39Z

← Older revision		Revision as of 14:42, 4 January 2018
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	Late payment, and indeed non-payment has been a blight on the construction industry for decades. It is widely acknowledged as an industry with one of the worst payment records in the United Kingdom.		Late payment, and indeed non-payment has been a blight on the construction industry for decades. It is widely acknowledged as an industry with one of the worst payment records in the United Kingdom.

−	In November 2017, the Federation of Master Builders (FMB) lambasted what they describe as ~~“cowboy clients”~~ – clients or large contractors - for spurious retentions and late payments. This came at the time of the demise of Lakesmere, a UK cladding and roofing specialist with annual revenues in excess of £120m. The reasons for late payment are complex and frequently not transparent.	+	In November 2017, the Federation of Master Builders (FMB) lambasted what they describe as 'cowboy clients' – clients or large contractors - for spurious retentions and late payments. This came at the time of the demise of Lakesmere, a UK cladding and roofing specialist with annual revenues in excess of £120m. The reasons for late payment are complex and frequently not transparent.

−	The root cause may lie in a fundamental change in the structure of the industry that took place in the ~~1970’s~~ – the birth of the Management Contractor (or Main Contractor). This lead to construction companies that had previously employed specialists and direct labour, and owned or leased their own plant, shifting these perceived liabilities off their balance sheet. There were relatively sound accounting principles for taking this route – the fewer liabilities that a company had on their balance sheet, the less the imperative to tender for work to service this employed capital and to keep the workforce occupied rather than sitting idly.	+	The root cause may lie in a fundamental change in the structure of the industry that took place in the 1970s – the birth of the Management Contractor (or Main Contractor). This lead to construction companies that had previously employed specialists and direct labour, and owned or leased their own plant, shifting these perceived liabilities off their balance sheet. There were relatively sound accounting principles for taking this route – the fewer liabilities that a company had on their balance sheet, the less the imperative to tender for work to service this employed capital and to keep the workforce occupied rather than sitting idly.

	However, the net effect was to create a fractured and potentially very long supply chain consisting of many different verticals of specialists, who could be called upon when they were needed. This sounds fine in theory but the result is that money or value for payment for goods or services provided now has to pass through an increased number of hands.		However, the net effect was to create a fractured and potentially very long supply chain consisting of many different verticals of specialists, who could be called upon when they were needed. This sounds fine in theory but the result is that money or value for payment for goods or services provided now has to pass through an increased number of hands.
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	* They may prefer the smaller contractor, their supplier, to bear the burden of providing finance rather than incurring bank or borrowing charges themselves.		* They may prefer the smaller contractor, their supplier, to bear the burden of providing finance rather than incurring bank or borrowing charges themselves.

−	Not one of these reasons is palatable or equitable. The government has taken steps to reduce the scourge of late payment, especially with regards to the last possibility, by placing a ~~“duty~~ to ~~report”~~ payment terms on large companies. However, this only deals with the very largest of UK ventures that have perhaps historically exploited their size and negotiating power. The problem of pate payment is endemic throughout many lower tiers of venture. Businesses, and SME’s in particular, need to become more vigilant and sophisticated in discerning those who can’t pay or those that won’t pay.	+	Not one of these reasons is palatable or equitable. The government has taken steps to reduce the scourge of late payment, especially with regards to the last possibility, by placing a 'duty to report' payment terms on large companies. However, this only deals with the very largest of UK ventures that have perhaps historically exploited their size and negotiating power. The problem of pate payment is endemic throughout many lower tiers of venture. Businesses, and SME’s in particular, need to become more vigilant and sophisticated in discerning those who can’t pay or those that won’t pay.

	= The risks =		= The risks =

−	Last year Lloyds Bank reported that UK SME’s are owed (this number – it is not a typo) £586 billion in unpaid invoices (~~Source~~: Business in Britain, Lloyds Commercial Banking, 24th October 2016). In April 2017, the Zurich SME Risk Index suggested that SME’s are owed an estimated £44.6 billion in late payments. These are breath-taking figures.	+	Last year Lloyds Bank reported that UK SME’s are owed (this number – it is not a typo) £586 billion in unpaid invoices (source: Business in Britain, Lloyds Commercial Banking, 24th October 2016). In April 2017, the Zurich SME Risk Index suggested that SME’s are owed an estimated £44.6 billion in late payments. These are breath-taking figures.

	The UK construction industry is a vital foundation of our nation and economy. It is responsible for 7% of GDP and employs approximately 10% of the workforce. A staggering 20% of all UK businesses are construction related. Including businesses that are VAT registered or have employees, there are c. 300,000 businesses. The number of construction related ventures increases to 980,000 if you include sole traders.		The UK construction industry is a vital foundation of our nation and economy. It is responsible for 7% of GDP and employs approximately 10% of the workforce. A staggering 20% of all UK businesses are construction related. Including businesses that are VAT registered or have employees, there are c. 300,000 businesses. The number of construction related ventures increases to 980,000 if you include sole traders.
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	= Is there an obvious solution? =		= Is there an obvious solution? =

−	Sadly, there is not. The best advice though, as in so many situations, is to be ~~“knowledge rich”~~. Ensure you have good knowledge of all of the businesses in your supply chain:	+	Sadly, there is not. The best advice though, as in so many situations, is to be 'knowledge rich'. Ensure you have good knowledge of all of the businesses in your supply chain:

	* Know the financial health of all of the businesses you are involved with, whether directly or indirectly.		* Know the financial health of all of the businesses you are involved with, whether directly or indirectly.
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	* Late payment.		* Late payment.
	* The Late Payment of Commercial Debts Regulations 2013.		* The Late Payment of Commercial Debts Regulations 2013.
		+	* Payment.
	* Payment notice.		* Payment notice.
	* Payments to nominated sub-contractors.		* Payments to nominated sub-contractors.

Designing Buildings at 14:44, 13 November 2017

2017-11-13T14:44:25Z

← Older revision		Revision as of 14:44, 13 November 2017
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	-----		-----
−	This article was created by --[[User:TenderSpace\|TenderSpace]], whose [~~[_https~~://www.thetenderspace.com/toolbox/finance-checker\|Finance Checker]], developed in conjunction with CreditSafe, offers critical decision making information and live updates on possibly detrimental financial changes.	+	This article was created by --[[User:TenderSpace\|TenderSpace]], whose [https://www.thetenderspace.com/toolbox/finance-checker Finance Checker], developed in conjunction with CreditSafe, offers critical decision making information and live updates on possibly detrimental financial changes.

	= Find out more =		= Find out more =