Scottish builders hit by late payments

In the last year, 80 per cent of Scottish construction firms experienced problems due to the late payment of invoices, according to the research from the Scottish Building Federation (SBF).

The SBF's Scottish Construction Monitor report also found that, on average, Scottish building companies are still owed £90,000 for work where the agreed payment period has expired. The average value of invoices that have been written-off in the last year alone reached £6,000.

The news comes after the Forum of Private Business expressed concern that a number of large businesses with lengthy payment times were planning to sign up to the Prompt Payment Code (PPC).

The PPC aims to ensure prompt payment for suppliers, particularly for small businesses who are harder hit by cash flow problems and the knock-on effects for growth. Under the Code, companies agree to pay their suppliers on time and to follow set processes for any payment issues that may arise. Business minister Michael Fallon has pledged to name and shame FTSE 350 companies that failed to sign up to the PPC.

Michael Levack, executive director at the SBF, said:

"Late payment of invoices has long been the bane of many construction firms. But in the current economic climate, it risks becoming the difference between continued trading and business failure. For Scotland's construction industry, this survey demonstrates that late payments have become an issue of epidemic proportions, affecting an overwhelming majority of businesses, irrespective of their size."

"In the private sector, we need to see a greater appreciation of the serious problem this has become as well as tougher sanctions against clients that repeatedly fail to pay their bills on time."