[ Spotlight: Late payment ]
GIVE ME MY MONEY!
The current economic conditions have exacerbated the problems of late and non-payment that have blighted the construction industry and jeopardised the ability of subcontractors to survive in these tough times. We fi nd out what the ECA is doing to help its members maintain a healthy cash fl ow, and off er some advice about how to increase the likelihood of prompt payment
A
lthough businesses should be paid for the work they carry out in a timely fashion, the reality is that late and non-payment are growing problems within the electrical
contracting sector. Not surprisingly, the current economic climate has contributed signifi cantly to this situation, and companies must now be extra vigilant in their business dealings if they are to maintain a steady fl ow of cash.
The bigger picture Although the economy is key factor, late payment has been a persistent problem for many years. A combination of the retentions scheme, a widespread ethos of ‘pay at the last minute’, and attempts to ‘knock’ and renegotiate the value of a contract after project completion have not only created a culture of mistrust and suspicion, but also led to the insolvency of many electrical contracting fi rms. The ECA has been at the forefront in lobbying
the government on this issue. Paul Reeve, head of Business Policy and Practice, comments: ‘As a member of the Specialist Engineering Contractors’ (SEC) Group we have taken the issue of fair payment to government for many years, and we will continue to pursue the goal of ECA
members beng paid when they should be paid. Worryingly, the prevailing situation shows few signs of improvement, with some main contractors moving payment terms out to 120 days. This is unacceptably long, and sometimes can be life- threatening for SMEs, who all too often experience cash fl ow problems and spend valuable staff time chasing payment instead of delivering productivity. For these and other reasons, the ECA continues to push for across the board
54 ECA Today March 2013
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