We are seeing late payments in the construction industry more often than we should. This alongside reduced or non-payments is becoming more and more of a problem and often contractors suffer as a consequence.
There are two main reasons why payments are likely to be delayed. The first is retentions, the building contract will probably state that the client is allowed to retain the money to allow for such circumstances such as work not being carried out correctly. The second reason is that there are potential issues with cashflow. Some clients and contractors unfairly delay payments to improve their cash flow, which has a knock on effect further down the supply chain.
There isn’t an obvious solution, but it helps if you have the right knowledge. Using our experience we have identified two simple tips to help you get paid on time:
Make sure your suppliers are going to be able to satisfy your order and that payments you make for goods supplied are only made after the supplier has been paid. If you don’t do this they have the right under the sale of Goods Act 1979 to remove those goods.
Where you can, you should be credit checking every business you are involved with, whether directly or indirectly. Deteriorating payment terms is a sure fire sign of cash flow issues. In reality doing this may be too costly and it is not always easy to access this information. A single credit report from one of the top UK credit agencies can cost as much as £25! Embracing technology allows much easier and cheaper access to this information.
Copronet is a cloud-based platform that gives you peace of mind when it comes to worrying about late payments and looking at working with other contractors. Our tools have been developed to allow you to keep track of all aspects of the supply chain, from checking finances, to asking questions of potential clients and identifying problems early with the aim of avoiding the contractor being a victim of non-or late payment.
We have partnered with one of the UK’s leading credit rating agencies, CreditSafe. At the touch of a button you can see the financial standing of anyone in your supply chain. With alert functionality, if their financial standing changes, for example, a change in their credit score, credit limit or payment trend you will receive an email notification alerting you of this fact. The credit checker tool gives you instant access to any company’s financial stability.
Copronet supports NAPIT members with tools to grow, manage and protect their businesses.