Payment Culture in the UK Construction Sector
Late payments have long been a problem in the construction industry, with small businesses often the most affected. According to recent reports, more than half of small construction companies in the UK are paid late, with some payments delayed by up to six months. These delays can have a significant impact on cash flow, making it difficult for businesses to pay suppliers, cover overheads, and invest in growth opportunities.
One of the main challenges of late payments is that they create a domino effect. When a company is paid late, it may struggle to pay its suppliers on time. This, in turn, can cause suppliers to delay payments to their own suppliers, and the cycle continues. The longer the delay, the more severe the impact on the entire supply chain.
Much good work has been done by the Building and Construction sector in the past two years to improve payment culture and the results of that work can be seen on this chart, with the two slowest paying companies from last year, Canary Wharf and ISG Interior Services both reducing their payment times by two-thirds. There are an increasing number of fast paying companies in Construction with the same ten fast payers from last year remaining mostly the same. But Dyer & Butler should be called out for their work to bring payment times from 42 days last year to just 14 days this year.
In conclusion, slow or late payments remain a significant challenge for small businesses in the UK Construction sector in 2023. These delays can have severe consequences, including cash flow problems, increased costs, and reduced morale. Addressing this issue requires a collaborative effort from all parties involved in the supply chain to ensure that payments are made on time and in full.