Concern over Willmott Dixon's 'early-payment' scheme

Willmott Dixon’s new voluntary ‘early-payment’ scheme requires subcontractors to agree to 65-day payment terms, it has emerged in a move that has provoked concern among critics.

This month, Willmott Dixon launched its EarlyPay system, which enables its 650 “category A” subcontractors to get paid up to two weeks earlier than their current payment terms, with suppliers on 42 day terms able receive their payments after 28 days, while those on 30 day terms will be paid after just 21 days.

Although subcontractors will not be charged for signing up to the scheme, they will pay 2% interest for the period between the new earlier payment date and their existing payment terms.

The scheme was unveiled just days before the Construction Leadership Council announced it had agreed a payment charter that would require contractors who sign-up to pay their supply chain within 60 days, decreasing to 30 days by 2018.

The formal charter is set to be launched this month.

However, Building has now learned that under Willmott Dixon’s system subcontractors must agree to their payment terms being extended to 65 days – a fact not contained in the firm’s public statements about the scheme.

Willmott Dixon’s standard payment terms remain at up to 42 days and contractors on the EarlyPay system can opt-out with one month’s notice.

Firms under the voluntary scheme will have a clause inserted in their contracts that commits Willmott Dixon to reimburse any interest subcontractors have to pay on payments made on or after their existing payment terms.

Willmott Dixon will use the extra cash it gets from longer payment periods to fund its regeneration business.

But Ken Lewandowski, deputy chair of Scottish government review into procurement in construction, described Willmott Dixon’s system as “daylight robbery”.

He added: “Why should you have to pay money to get paid [within 30 days]? The sooner we have legislation for 30 day payment terms the better.”

Rudi Klein, chief executive of the Specialist Engineering Contractors Group, who has campaigned for better payment terms for sub contractors, said he was “always uneasy” when contractors extended payment terms.

He added: “With the charter about to be formally launched I don’t think it’s is appropriate that contractors are extending payment terms and I’m not comfortable with it.”

However, he added that as there were no additional costs to subcontractors to get paid on their standard terms under Willmott Dixon’s system he felt some subcontractors would find the system valuable.

A spokesperson for Willmott Dixon said the firm had consulted widely on the scheme before its launch and that the feedback from the supply chain had been “very positive”.