23rd May 2014
From 2018, all suppliers must be paid within 30 days
Find out all about the new deal involving late payment and what it means for you.
As a result of the ongoing debate over late payment, a deal has finally been made through the Construction Leadership Council. Major contractors, clients and the government have all agreed to the proposal, which will ensure all suppliers are paid within 30 days as of 2018. Members of the Construction Leadership Council have been trying for some time to solve the problems of long payment terms and late payment that have plagued the industry for years, and it would seem that they have finally found a solution.
The agreement will commit clients and contractors who sign up to the charter to pay all of their suppliers within 60 days as of now, reducing it for 45 days from June 2015 and 30 days from January 2018. It also contains a commitment to work towards the abolition of retentions by 2025, when the Industrial Strategy for Construction is due to be completed and to make all payments electronic. However, it is a voluntary charter, which means that not every contractor will decide to agree to the terms, and some are keen to get their hands on retentions before 2025.
Any organisation that agrees to the charter will be monitored against a set of key performance indicators, and although voluntary, it is likely that many large contractors and clients will sign up to the charter, in case they lose subcontractors to firms with better payment terms. It is important that all those in the construction industry are able to manage their accounts effectively and efficiently to ensure that late payment is avoided at all costs and that they do not breach their contracts. Integrity Construction’s subcontractor management software can provide you with the tools you need to manage your payroll and your subcontractors to help you attract loyal workers and clients. If you’d like to find out more about the benefits our construction-specific financial software provides, get in touch today.
Are late payments affecting your business? Two recently conducted surveys suggest that they remain one of the key issues facing the industry.
As late payments continue to be an issue, subcontractors take further action to name and shame firms who are not paying them on time.