28 March 2019

There is no place for a ‘pay to get paid’ culture in construction

There are reports that Kier is planning to charge subcontractors 1.5% of their package turnovers to become closer strategic partners, in an effort to promote better supply chain relationships.

However, there are concerns that this is only the latest in a series of measures across the industry that are fueling a ‘pay to get paid’ culture. In practice, this forces many subcontractors – including SME construction companies – to get paid less than what they are owed in exchange for a steady cash flow.

The National Federation of Builders (NFB) is dismayed at the suggestion that the supply chain could pay up to 1.5% of their package turnover to work more closely with Kier and get paid more quickly.

Despite being a member of the Prompt Payment Code, which expects businesses to pay 95% of their invoices within 60 days, Kier takes more than 61 days to pay 18% of its bills. In addition, Kier takes an average of 42 days to pay its invoices, with 64% not paid within agreed terms. Richard Beresford, chief executive of the NFB, said:

“Companies who have managed their spreadsheets poorly should not expect subcontractors to pay for their failures. If we’re to work as one, the first step is to treat your supply chain as you would want to be treated.”

Neil Walters, NFB national chair, said:

“The reports surrounding Kier’s ‘Working as One’ initiative are an insult to the Prompt Payment Code, the supply chain and the construction industry. There is no place for a ‘pay to get paid culture’ in our industry.”