In Wales, Late Payments’ Ripple Effects Felt In Construction Sector

A Welsh construction trade group is advocating for safeguards to get smaller suppliers paid in the wake of a larger firm’s collapse. In New Zealand, a name-and-shame game has taken root to expose late payors or firms that do not deliver goods at all.

In Wales, late payments are getting greater scrutiny in the wake of the collapse of construction firm Dawnus earlier this year. As reported, the company, which worked on construction projects across the U.K. and overseas, had hundreds of suppliers — and a significant number are still owed payments.

According to the BBC, the Federation of Master Builders (FMB), an industry trade association that represents small and medium-sized businesses (SMBs), said the government should “do more” to protect smaller companies from the financial impact of the collapse of firms such as Dawnus. The full list of creditors owed money by the firm has yet to be published.

The fact is that late payments are “rife,” noted the FMB, and a framework focused on curbing late payments should be extended. The Welsh government, reported the BBC, also said it would look at any proposals aimed at improving the late payments situation. In one example of current policy, any projects worth more than £2 million (nearly $2.6 million USD) are required to use Project Bank Accounts (PBAs).

Under that framework, money is deposited in the accounts, and each firm tied to the project is paid from those accounts — payments are made as work is completed. The FMB said it wants the government to boost the use of project accounts to include projects under £2 million.

According to one government spokesperson to the BBC, “While we cannot mandate the use of Project Bank Accounts on all public sector construction contracts, we continue to promote the use of PBAs across the public sector as good practice in ensuring fair and prompt payment. We are monitoring the effectiveness of the policy, and will consider any proposals to improve upon it, including revising the current £2 million threshold.”

The spokesperson noted that such bank accounts have been encouraged for use by councils and other health boards.

Naming And Shaming In New Zealand

Separately, in New Zealand, the Consumer Goods and Services Ombud (CGSO) has intended to, as BusinessTech said, “name and shame” companies that do not cooperate with terms established for deliveries or payments. The aim, according to the publication, is for consumers to be “cautious” when dealing with companies named by the ombudsman.

“Due to the amount of monies paid by consumers, and the refusal to refund consumers or deliver the goods paid for, we have taken the decision to name the suppliers who fail to make good when this happens,” said the office of the ombudsman, Magauta Mphahlele.

Among the companies named, and in an example of the goal to “name and shame,” consumers of AF-FSL Glass Distributors “ordered aluminum doors and windows, but the goods were never delivered. “The supplier is not co-operating with our office and it would appear that they are in contravention of Section 40 of the CPA, having accepted payment for goods that they have not delivered. They are further contravening Section 19 of the CPA, having failed to deliver goods within a reasonable time.”

The CGSO said that, in the first quarter of 2019, it had 11,787 calls from consumers about services and goods that remained undelivered. In addition, the office noted, there has been an increase in complaints related to online commerce.