Late payment is a perennial issue, and the UK construction sector is no exception.
When the Small Business, Enterprise and Employment Act 2015 introduced mandatory reporting on Payment Practices and Performance in 2017, not a single BuildUK main contractor member paid invoices within 30 days.
A payment period of 30 days is not the one set by the Construction Acts 1996 and 2009 or the associated Scheme for Construction Contracts. The standard was set by the Prompt Payment Code (established in 2008 and revised in 2021). The Code requires 95% of invoices from small businesses – ie those with fewer than 50 employees – to be paid within 30 days, and all invoices to be paid within 60 days.
Some clients pay only a fraction of invoices within 60 days (Rolls-Royce only pay 20% in that period).
BuildUK’s infographic from January 2023 sets out that
- all their tier one contractor members are now taking an average of 30 days to pay invoices
- 95% invoices are paid within 60 days (as required by the Prompt Payment Code), and
- 83% are paid within the agreed payment terms.
What should you do?
As a paying company, if you haven’t already, sign up to the Code and use their Action Plan template to change your processes to meet the requirements. If you have signed up, stay on top of your data and ask your providers if you can do even better.
As a provider, check the current data on whether the payer will (or might) pay you on time either via BuildUK data or from the gov.uk data. If you won’t get paid on time, build that into your prices where possible, as you are acting as their cashflow.
Let’s keep the money flowing!
