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Scottish Construction Trade Association Calls For Action Amid Late Payments

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Spotlights continue to be trained on late payments in the United Kingdom, where a construction trade group in Scotland has called for protection from “payment abuse.” In other news, Australia still sees larger firms “rarely” paying suppliers within the stated goals of 30 days.   

In the United Kingdom, late payments continue to attract attention, with a continued spotlight on the impact on small businesses.

Among the latest headlines, within the construction sector and as reported by Scottish Construction Now, smaller firms within that vertical are being hit by late payments — as the fallout from the Carillion bankruptcy continues. The trade group known as SELECT has advised the Scottish government’s economy, energy and fair work committee that reforms should address late payments.

Among the suggestions, money withheld from these suppliers, for the purpose of ensuring work is done properly, should be placed in trust to ensure proper payout. The retentions have traditionally been used to boost cash flow at the paying firm. Per a statement from Alan Wilson, acting managing director of SELECT, “Research carried out by the U.K. government revealed that over a three-year period to 2016, firms in the industry were hemorrhaging almost £1m worth of retentions per working day due to upstream insolvencies. Retentions legally belong to the firms from whom they have been withheld.”

Carillion’s collapse came in 2018, and the public sector contractor had owed as much as £2 billion to contractors when it went under.

Larger Firms Lag in Australia

Elsewhere, in Australia, some of the largest firms in that country have been seemingly lax in adhering to promises that they will pay supplier invoices within 30 days.

As relayed in SmartCompany, a report released last week by the Australian Small and Family Enterprise Ombudsman said it takes about 36.7 days for smaller firms to be paid by larger ones. That research spanned 2,400 smaller firms and data from roughly a thousand larger companies. The findings showed that though promises remained in place to pay within a 30-day window, most companies “rarely” keep to that timeframe.

In light of the findings, Australia’s Small Business Ombudsman Kate Carnell has said an independent framework for reporting payment performance should be put in place for companies with more than $100 million in turnover.

“The real concern here is the reluctance of large corporations to be transparent,” Carnell told the news outlet. “Even businesses who are paying in 30 days and have signed the BCA [Business Council of Australia] supplier code are unwilling to actually report on how often they’ve delivered. I don’t know why you would hide it … it creates the impression they’ve got something to hide.”

In some cases smaller companies are facing lagging payment terms that stretch across more than 90 days. About half of all respondents to the ombudsman’s study said more than 40 percent of their invoices were paid late (in excess of 30 days), and as the report noted, another 28 percent said more than half of their invoices — in fact, 60 percent — were paid late.

Separately, in the United Kingdom, the small business commissioner and several politicians have criticized health food firm Holland & Barrett for treating suppliers “shabbily” through a “purposeful culture of poor payment practices,” The Guardian reported. Small Business Commissioner Paul Uppal said the company took an average of 68 days to pay invoices and that as many as 60 percent of invoices were not paid within stated terms. The criticism, according to the report, came after a technology company had an unpaid invoice that was reportedly paid 28 days after the complaint was received by Uppal’s office.

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