Government figures reveal how long it takes big builders to pay their bills

The country’s biggest contractor Balfour Beatty and Kier are the industry’s poorest payers among top 10 firms ranked by turnover, according to the first set of comprehensive data on how quickly firms pay their bills released by the government today.

For many firms in contracting and housebuilding, it is the first time time they have been compelled by law to spell out their payment practices in black and white.

The issue of how long main contractors take to pay their subcontractors has been a long-running sore for many in the industry with Carillion’s collapse in January putting the topic firmly back in the spotlight.

Under regulations introduced in 2015, which came into force last April, all large UK companies, deemed to be those which include firms with a turnover of £36m or more and over 250 employees, now have a duty to report how long it takes them to pay their bills.

The first deadline for many firms under the new initiative elapsed last night and covers those companies whose 2018 financial year started on 1 January.

Businesses are required to report within 30 days of the close of each six month trading period, meaning that firms who report their results in the calendar year will have until the end of next January to publish their next set of results

Balfour Beatty, which last week topped Building’s Top 150 Contractors and Housebuilders, recorded an average payment time of 54 days – making it the equal worst payer of the industry’s biggest firms, according to payment practice reports published by the government.

It paid 27% of invoices within 30 days, 50% between the 31 and 60 day mark, while 23% were paid after 61 days.

In April, when firms were required to publish annual figures showing the pay gap between their male and female employees, the greatest discrepancy among the industry’s biggest firms was also at Balfour Beatty – which revealed its pay difference was 33%.

Top 10 turnover firm Kier also reported payment terms of 54 days in the half year to 30 June. This was a slight improvement on its performance for the previous six months.

The contractor’s year end is 30 June and so was required to publish its first set of figures for the period covering the period between 1 July and 31 December last year. Over this period it took an average of 59 days to pay its invoices.

Interserve’s construction business took an average of 50 days to pay up, even though Interserve PLC took an average of just 30 days.

Barratt Developments was the standout payment performer among firms with the biggest turnovers, taking an average of just 23 days to pay up. It paid 74% of its invoices within 30 days, 25% within 31 to 60 days, while just 1% were paid after the 61 day mark.

Willmott Dixon and Lendlease Europe were among the other strong performers, recording average payment times of 33 and 35 days respectively.

Rick Willmott, chief executive of Willmott Dixon, said: "As an industry, we must find a silver lining to the post Carillion era. To do so we need to be reminded of what needs to change, today's payment practice statistics should be one of those change point moments.    

“Our industry's ability to thrive in the future is directly linked with how we support our SMEs and today's publication of payment practices means stakeholders can now see which of us is taking a responsible approach to prompt supply chain payment."

The country’s biggest private contractor Laing O’Rourke has not yet had to file its figures because its year end is 31 March, meaning its first reporting period for how quickly it pays its suppliers closes on 30 September. It will then have up to 30 days after that to lodge its figures.