From Jo Rider-Head of Construction Recruitment Services at Orchard
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Most businesses like to sit on their money for as long as they can; stories of major supermarkets paying suppliers so late that the farmer/producer might have to wait 120 days for payment abound.
An whilst the construction sector pays faster than the supermarkets, many sub contractors are struggling to pay the wages, especially when they have increasing order books. As often is the case Construction News has written an excellent article ….
With credit to Construction News
Jo Rider, Head of White Collar Construction Recruitment Services , August 2015
Jo@orchardjobs.com
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| Sometimes it takes an outsider to point out the blindingly obvious.
Like it or not, it seems that right down the supply chain, companies accept poor payment practices like they’re an irritating fact of life, alongside Monday mornings or the British weather.
But it doesn’t have to be this way.
Madani Sow from French giant Bouygues has an outsider’s view on the issue… And he thinks it’s crazy that firms don’t pay sooner.
“Main contractors should pay within one month,” he told delegates at the Construction Industry Summit in London last week. “Why don’t we have security of payment?”
A good question, but one which no one in the room seemed to have a good answer for!
He continued to chastise his British audience.
“Contractors should keep 30 per cent of their turnover as cash but they don’t in the UK.
“At the time the contract is signed the job is in negative profit and therefore [it’s a] huge risk.” Mr Sow’s incredulity at our payment culture was well timed. Last week, a Construction News survey for software firm Textura found that more than one in three main contractor respondents take on average longer than 60 days to pay, with over a quarter of subcontractors admitting the same.
The problem is this culture seems endemic, which will come as no surprise to those subbies struggling to make ends meet despite a strong order book. As the survey found that 34 per cent of main contractors wait longer than two months to get paid themselves. So is no one to blame or is everyone? What is the answer? Do you have an opinion?
In the recruitment sector, we rely upon being paid according to our terms of business other wise we’d really struggle, so why does the construction sector pay so late? Habit?
Let me know what you reckon
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The post Late Payment Terms! Any Answers? appeared first on Orchard Recruitment.