16 November 2018

Engineering services optimistic despite payment problems

A collective study by the Electrical Contractors' Association (ECA), Building Engineering Services Association (BESA), Scottish & Northern Ireland Plumbing Employers Federation (SNIPEF), and Scotland's electrical contracting trade association, SELECT, has shown steady growth in Q3 2018 despite ongoing payment and retention problems across the sector.

The latest quarterly sector-wide Building Engineering Business Survey, sponsored by Scolmore, has revealed that up to eight out of 10 engineering services organisations say they typically receive payment more than 30 days after the due date. This comes despite over half (56 percent) of buyers inserting under-30-day payment clauses in their contracts.

Despite this, over three in four engineering services organisations (77 percent) say turnover increased or remained steady in Q3 2018, with nearly eight out of 10 (78 percent) predicting their turnover will grow or remain steady for the current quarter (Q4 2018).

Buyers in the commercial sector were identified as the worst payers, with over eight in 10 (83 percent) saying they received payment more than 30 days after commercial work. For public sector work, on average, 71 percent of respondents were paid after 30 days. Overall, almost a fifth (19 percent) were paid after 60 days.

Retentions were held against nearly two thirds (58 percent) of survey respondents. More than half (52 percent) said that between one and 10 percent of their organisation’s turnover was tied up in retentions.

ECA deputy director of business policy and practice, Rob Driscoll, said: “These figures show that overturning the late payment issue remains the key to unlocking productivity, growth and prosperity, particularly with the uncertainty of the next two quarters. 

“ECA will continue to work diligently with government, the Small Business Commissioner and others to gain further support for initiatives such as the Aldous Bill and help the industry to resolve its long-running, and continually damaging, payment problems.”

BESA public affairs and policy manager, Alexi Ozioro, said: “It is great to see more growth in the sector and industry, but it is frustrating to know that the growth figures would be even bigger if late payment was not impacting so many businesses. 

“The government’s recent commitment to legislation on the issue of retentions is very encouraging, and we can only hope that the wider fair payments landscape moves along too.”

SELECT acting managing director, Alan Wilson, said: “It’s clear that despite well-intentioned statements from a number of bodies and governments, nothing has altered in the payment regime in our sector. It’s a matter of urgency that this issue, which is the number one priority for many businesses, is tackled quickly and effectively.   

“The time for talking is over; we must see some real action to help alleviate the issues our members face.”

SNIPEF chief executive, Fiona Hodgson, said: “These results highlight the urgent need for action to address the culture of late payments within the industry. While there is optimism with predictions of steady or increased turnover, issues with payments and retentions remain a major cause of concern with our members that urgently needs to be addressed. Change is needed now to provide certainty to businesses.”

The survey received 387 responses from companies across the multi-billion pound industry, mainly regarding their performance in Q3 (01 July to 30 September 2018), and expectations for Q4. 


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