Late payments and retained cash are significant issues for engineering services companies, with the construction sector leading the UK economy in reported insolvencies. A recent study by the Department of Business and Trade revealed that late payments cascade down the supply chain, severely impacting SMEs.
Actuate UK has long advocated for stronger prompt payment measures and an empowered Small Business Commissioner to identify and penalise repeat late payers. The alliance plans to contribute its views in the forthcoming Government consultation on additional legislative measures to address payment issues.
Rob Driscoll, ECA's director of legal and business, hailed the new legislation as a monumental step towards cash-retentions reform. He emphasised the importance of transparency in changing corporate culture and excluding poor performers from public procurement, particularly in the wake of rising insolvencies and the collapse of ISG.
Debbie Petford, BESA's director of legal and commercial affairs, also welcomed the new rule. She stressed that the ramifications of late payments and retentions are deeply felt down the supply chains, putting immense pressure on smaller companies. She urged the Government to keep late payments at the top of their agenda to foster necessary cultural changes within the industry.