The National Federation of Builders (NFB) has responded to Jeremy Corbyn’s promise of a crackdown on late payments if the Labour Party is voted in at the General Election.
The NFB has highlighted the massive problem of unpaid debts within the construction sector stating that tradespeople are getting hit harder than most. The NFB claims that the construction industry has the worst track record for payment than any other sector in the British economy.
It is said that over 30 per cent of late payments in total are within the construction sector citing a whopping £30 Billion is owed to Small and medium sized Construction firms including self employed builders, roofers and joiners.
The NFB warned that late payment is making it extremely difficult for construction firms to grow their businesses according to CEO Richard Beresford.
“These are the local companies that – while working hard to make ends meet – employ local workers, train local apprentices, and generate money in their local economy.
“Large companies who continue to fail their payment obligations to SMEs are not helping the construction industry, especially when we need to focus our resources as an industry to address key challenges such as the shortage of skilled workers and the housing crisis.”
What is the current Government doing about this?
Teresa May and her cabinet have already taken steps to address the problem of late payment and unpaid debt with the introduction of new regulations which require large companies to publish their payment practices.
Labour’s Jeremy Corbyn has stated that a Labour government would impose a statutory payment deadline of 30 days and introduce a streamline system to resolve payment disputes. Easier said than done we hear you say.
5 tips for dealing with late ‘Trade’ payment
- Clear payment terms
Make sure you clearly stipulate your payment terms at outset. This will prevent any ambiguity later on especially when it comes to time for payment.
2. Chase unpaid invoices
A solid company will already have a credit control procedure in place to chase up ‘late’ payments. Ensure this is done to minimise cash flow disruption.
3. Manage finances wisely
Always better to have a buffer zone in your business bank account to cover the cost of regular overheads such as wages, rent, stock etc
4. Add interest
If your customer is a Limited company, you can add statutory interest under the late payment of commercial debts act which is eight per cent above the bank of england base rate. i.e Base rate 2% + 8% = 10% interest rate applicable from the time the invoice is overdue.
5. Take action
Thousands of SME’s went bust last year due to not taking a positive action. Working with a Professional Debt Collection Agency will add massive value to your credit control procedures and minimise losses in the long term.
More information about if you are self employed and not been paid.