16 October 2018

Late payment is not the construction industry’s model

Construction News has reported that Bev Dew, finance director at Kier, stated that the firm is “consistent” with its payment practices and that the onus on improvement must sit with clients.

Kier is one of the industry’s poorest payers on the Government league table, with an average of 54 days to pay.

The National Federation of Builders (NFB) recognises that a client not paying on time has a negative effect on the entire supply chain, but vehemently challenges the assertion that the late payment model is a consequence of thin margins.

Using the supply chain’s money to play the markets, then using an early payment system that pays suppliers less than they were originally owed, is cheating suppliers twice. Consistent, institutionalised late payment is not an industry practice, but a business failing. Neil Walters, national chair of the NFB, said:

“Contractors would not accept less money more quickly because it would hinder their business practice. So why do they think it is okay to offer their supply chain those terms? Kier is short-changing the businesses they rely on so they can continue operating. This is neither best practice nor the construction industry’s model, simply a model Kier has chosen to adopt.”