The Association for Consultancy and Engineering (ACE) has welcomed government plans to tackle late payments, and warned that the problem could have serious consequences for small construction companies.
Minister for the cabinet office Francis Maude yesterday reiterated the need for prompt payment of suppliers. However, the ACE said suppliers in the construction supply chain are still affected by late payment.
Respondents to a recent survey of SMEs in the consultancy and engineering sector revealed that slow payment and non-payment of invoices was continuing to cause cash flow issues, with some major organisations still adopting a “pay-when-paid” approach, the ACE said.
Respondents also indicated that these issues were compounded by continued lack of access to affordable credit, downward pressure on fee levels and onerous procurement processes that prevent smaller suppliers from taking part.
Issues of cash flow and late payment not only challenge the sustainability of the construction supply chain, but also have implications for the quality of work that is achievable.
ACE SME Forum chair Alan Bramwell said: “Despite the government’s very public commitment to improved payment rates, we still have a long way to go. For smaller businesses, interruptions to cash flow can be extremely serious.
“All organisations, both public and private sector, have a duty to honour the terms of their contractual agreements and pay their bills on time.”