BRITISH CONSULTANTS have been warned that complaints about payment delays on European Union aid projects could ruin their chances of being shortlisted for future lucrative schemes.
A senior industry source said that European Commission officials, operating in the hot-house atmosphere created by recent concerns over the misuse of EU funds, had warned UK firms to tread carefully when disputing the time taken for fees to be paid. However, unpaid invoices worth close to £1M on projects funded under the Technical Assistance for the Commonwealth of Independent States scheme persuaded Scott Wilson chairman Bob McGowan to speak out.
At the start of October SW submitted invoices worth £950,000 for work on two projects - feasibility studies for border crossings between the former Soviet Union and eastern Europe and the development of internal waterways and river-sea transport in Russia.
'When we came back after the new year we thought it was time to check when we might be paid,' said McGowan. 'We were told that the Commission wouldn't start processing our invoice until the end of January.' Payment is expected in mid-March.
McGowan said its last TACIS invoice was paid in 148 days. The problem is exacerbated as under the terms of the contracts SW can only invoice every five months.
The contracts do allow for interest to be paid after 60 days. However, this is paid at a rate of 1% over the level set by the European Monetary Institute - currently 3%. Introduction of the European single currency at the new year means that British firms are at a disadvantage as the interest payments take no account of higher financing costs in Britain.
McGowan told NCE: 'There are few businesses our size that can shrug off a million pound debt for three months. It has distorted our cash flow projections and increased our creditor and debtor days.' This, he added, complicated relationships with subcontractors, joint venture partners and banks and had raised financing costs.
However, despite SW's problems, the British Consultants Bureau claims the situation is improving.
BCB deputy director Nigel Peters said the Commission had made much effort to deal with the most outrageous cases of late payment (NCE 14 January). He added that effort was being focused on the review of financial controls for EU aid projects due at the end of this year.