Late payment still rife in construction as consultation targets large firms over payment practices

The Department for Business, Skills and Innovation (BIS) has published a consultation on proposals which will require large and quoted companies to publish detailed information about their payment practices.

This new mandatory reporting requirement has been developed in response to the Building a Responsible Payment Culture discussion paper, where a clear majority of respondents including the BWF supported greater transparency for poor payment practices.

The proposed new system aims to help companies to make decisions about who to work for and negotiate their payment terms. It will provide robust, standardised information that specialist contractors can use to easily compare the performance of new and existing clients.

A recent payment survey of NSCC and Federation of Master Builders (FMB) members found that 92% of firms agree contractual payment terms of 45 days or less but only 57% actually receive payment within those terms. The report, Credit Where Credit Isn’t Due, features responses from 719 businesses with a collective turnover of £2.3 billion. It shows that, although contractual payment terms are improving, late payment is still rife within the supply chain and more needs to be done to ensure payments are made within terms.

The consultation is seeking views on proposals that would see large and quoted companies:

–    Reporting on a quarterly basis
–    Reporting on standardised metrics on payment performance, including average time taken to pay invoices and the proportion of invoices paid beyond terms
–    Disclosing additional information on payment practices
–    Publishing the information on their websites
–    Facing fines for breach of the requirement.

The consultation document, Duty to Report on Payment Practices and Policies, is available online. Responses should be sent to latepayment@bis.gsi.gov.uk clearly marked as a response to the ‘Duty to Report Consultation’ by 2 February 2015.