New government fair payment rules will make a real difference to construction SMEs by helping finance flow down through the supply chain, according to the Federation of Master Builders (FMB).
On 7 December, Enterprise Minister Matthew Hancock announced that the government would ensure that all small businesses involved in a public sector supply chain would be paid at the same time as large contractors. It is also to consult on new measures to tackle late payment in the private sector
Brian Berry, chief executive of the FMB, said: “The Government’s new approach to ensuring 30-day payment becomes a reality throughout the supply chain on public sector contracts is a particular bright spot.
“Most small construction firms would be financially ruined if they had to wait as long as 120 days for payment, which is why many do not even attempt to form part of the supply chain for public sector contracts.
“This has been one of the major barriers to increasing engagement by SMEs (small and medium-sized enterprises) in public procurement, so it’s great news that assertive action has now been taken.
“The FMB is also working closely with government on a new Fair Payment Charter, which will contain even more measures to help speed up the flow of finance and ensure all parts of the supply chain can benefit from the public sector as a responsible client.”
Dealing effectively with late payments is crucial in maintaining the healthy cash flow that is essential for business survival.
Palmers can advise construction businesses on legal rights and legal action relating to delayed payments or non-payment. For more information, please contact us.