Late payment - Construction's record: 120 days

Building services companies are taking as long as 120 days to pay small suppliers in the industry – the worst late-payment record so far uncovered by Accountancy Age.

The latest figures will fuel the late-payment debate which erupted last November when Rentokil Initial issued controversial 60-day payment terms to its suppliers. November’s Late Payment Act allows small companies to charge an interest rate of 8% above base rate on unpaid bills after 30 days if no contract had been agreed.

The construction industry is renowned for lengthy payment times, due partly to long-term building contracts and the web of contractors and sub-contractors. But smaller industry suppliers say the payment terms adopted by the bigger companies are now affecting cash flow.

The 66-member Association of Ductwork Contractors and Allied Suppliers found Co-operative Wholesale Engineering had the longest average annual payment time of 93 days, followed by the How Group (87) and Haden Young and Crown House (79). Crown averaged 120 days for the third quarter of 1998.

The FD of a medium-sized ADCAS member said the Late Payment Act meant some contractors were forced to pay small sub-contractors within 30 days.

This was not an option open to a company of his size. ‘It makes things worse for us and I’m very disappointed,’ he said.