Just one-third of SMEs paid within 30 days, says FMB

Nearly a quarter of construction SMEs have had to wait more than four months for payment from a client or large contractor.

This is according to the latest research from the Federation of Master Builders (FMB), with less than one third of respondents stating they are always paid within the standard 30 days.

Almost three quarters claimed that ‘cowboy clients’ – those who delay or withhold payment without good reason or make unreasonable demands - are a serious problem for their businesses.

In terms of the negative effects that late payments are having on construction SMEs, three in 10 have had to delay payment to suppliers, a fifth say late payment has decreased their confidence in growing their business and 16% had to borrow additional funds from a bank or other lender.

Other effects sited were almost going out of business (8%), having to withhold wages and salaries from staff (5%) and actually letting staff go (4%).

Sarah McMonagle, director of external affairs at the FMB, said: “As we edge towards Brexit, we need the construction sector to be firing on all cylinders to shore up the wider economy. The last thing we want to see is thousands of builders going to the wall because of their customers refusing to pay on time.

“We strongly recommend that builders and clients do everything they can to protect themselves by using a written contract that includes an agreed payment schedule. Clients rightly demand a high level of service from their builder but home owners also need to keep their end of the bargain by paying on time.”

The latest survey comes two weeks after Rudi Klein, chief executive of the Specialist Engineering Contractors’ (SEC) Group, warned that subcontractors need to increasingly be on their toes to ensure they don’t get caught up in any payment problems.

He advised them to be aware of signs such as slow payment processes and an increase in contra charges, urging them to chase payment at the earliest opportunity to ensure they are made on time.