Chronically slow and late payment of bills is leaving construction businesses unable to invest and expand because of the strain placed on them, MPs have been told.

Late payment has become a common problem for business across the UK. Since the collapse of construction giant, Carillion, the business community has struggled with towering debt and low business confidence. This has been most apparent within the construction industry, with bad weather and Brexit uncertainty further threatening contractors’ prosperity and ability to invest.

As part of a recent parliamentary hearing, owners of small companies warned the business, energy and industrial strategy committee about the repercussions of allowing late payment torment to continue. The evidence focused on the maltreatment of supply chains by the hand of big construction companies. This was particularly demonstrated after Carillion’s collapse, with multitudes of small contractors left out of pocket.

Other issues such as retentions were also given due scrutiny. Retentions is money that is held back from contractors purportedly to motivate repair work, but has been vastly controversial. There have been many occasions when the money has not been returned to the contractor and suppliers have claimed it has merely lined the pockets of the larger business owners. When Carillion collapsed in January, £800 million of retention money that it owed to suppliers was lost.

The bosses giving evidence at the hearing called for the creation of independent trust accounts that would hold retention funds on behalf of suppliers. This should ensure contractors complete their duties without the concern for being fully recompensed. Groups such as the Specialist Engineering Contractors’ Group backed the proposal, but Kelly Tolhurst,  the small business minister insisted there was “no consensus” that the trust account would be effective.


Tim Hopkinson, director of E Poppleton & Son, a ventilation equipment contractor and manufacturer based in Colwyn Bay, Wales, said that retentions, combined with a broader culture of slow and late payment of bills, were damaging the industry. He called for legislation to tackle the problem.

This government hearing and the subsequent proposal all emphasise the shifting focus concerning late payment. Finally inspiring focus from Westminster, the late payment tower could be set to tumble. The small business minister was not impressed with the trust account proposal and any action from government could be a slow-burner.

Firms should focus on helping themselves as a result. At the Credit Protection Association, many of our Members have suffered from late payment. The CPA debt recovery and credit monitoring services have freed up cash flow and secured their financial future. The combined power of our credit reports, credit checks, directorship register and County Court data, all create a comprehensive overview of customers and suppliers, ensuring late payers are discouraged and good payers are rewarded.


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