Payment practices in the construction industry are not getting better, according to poll

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5th March 2021 12:07 - Construction

Payment practices in the construction industry are not getting better: A survey by Construction News and Oracle Construction and Engineering has found that payment practices are not getting better within the industry, with more than three-quarters of respondents (77%) saying that they have stayed the same or have got worse.

The poll of Construction News readers at the end of 2020, had 215 responses and found that for 37%, payment practices have become worse. Nearly three-quarters of businesses (72%) said they typically wait for more than 40 days for their money, while 43% said they are paid within 60 days. Three in 10 respondents said it takes more than 60 days for them to receive payment, while 7% said it takes up to 30 days.

When it comes to settling accounts with their own suppliers, 74% said they pay up in less than 40 days, while 34% said they ensure supply chain payments are made within a month. According to respondents, all invoices are paid within 76 days, with 3% saying it takes 60-65 days.

Digitising payments

The survey also asked respondents about digitising payments within their business, with just a quarter (25%) saying they have digitised or are in the process of digitising their payment processes. More than a third (37%) said they believe digitising payments will be beneficial to their business, however 42% said they don't know enough about it to comment and need to find out more.

When asked about the consequences of late payments for their business, 70% cited wasted time and resources, while 50% said it had a knock-on effect causing delays to outgoing payments, and 45% said it resulted in reduced profit.  Two-fifths said that consequences have included legal disputes or arbitration; 38% have seen delays or stoppages to work, and 37% have seen significant sums lost or written off. Other consequences included being forced to take out loans or landing in debt (23%), redundancies, hiring or pay freezes (17%) and reduced quality of work (12%). Just 6% said there has been no negative impact.



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