Mitigating Non-Payment in the Construction and Contracting Industry: The Effect of Payment Disputes

www.EQUE2.Co.UK EQUE2 MITIGATING NON-PAYMENT IN THE CONSTRUCTION AND CONTRACTING INDUSTRY: THE EFFECT OF PAYMENT DISPUTES Accuracy and efficiency will help to reduce the amount of payment disputes occurring within the construction industry. 20H B Late payments are a curse of modern companies in the construction industry, SIGNED CONTRACTS DON'T GUARANTEE PAYMENTS ARRIVING ON TIME. ISSUES ASSOCIATED WITH LATE PAYMENT CONTINUE TO HINDER THE GROWTH OF TH OUSANDS OF SMALL CONSTRUCTION BUSINESSES EVERY YEAR, クラ claims Helen Wheeler, Managing Director of Construction Finance at BFS. NEGATIVE IMPACTS OF PAYMENT DISPUTES According to the Federation of Small Businesses, 18% OF ALL SMBS OPERATE IN CONSTRUCTION 18% - more than any other business sector. In March 2015, a major timber-frame supplier in Wales was forced out of business after 18 YEARS of successful trading because of non-payments. LTHERE IS A RE-EMERGING TREND OF NON-PAYMENT BY MAIN CONTRACTORS ...WHICH CAN HAVE A CRIPPLING EFFECT リラ Simon Orrells, Managing Director of Frame Wise. Going to court to enforce payments often works, but can be long-running and time-consuming. A dispute between two major steelwork companies during the construction of London's Shard lasted three years, and ended with the loser PAYING ALMOST £825,000 IN DAMAGES. HOW TO MITIGATE NON-PAYMENT In February 2015, the banks' payment service (BACS) calculated that 76% OF UK FIRMS ARE FORCED TO WAIT AT LEAST A M ONTH 76% beyond agreed terms before being paid. For your company to remain protected throughout the construction industry, you should always include a 'GUARANTEED MEDIATION' clause in contracts. You should also have visibility of payments and reasons to back up any non-payment decisions. If your company plans to pay less than its contract indicates, because of design, quality or other issues, it must send a formal 'pay less' letter to the other party - ! OR IT WILL ULTIMATELY LOSE ITS CASE. "NOTIFY OR DIE" says Jonathan Waters, Founder of Helix Law, but your company can also mitigate non-payment throughout the construction industry by adopting the following takeaways: TAKEAWAYS Ensure the finance department keeps accurate and updated data on every contract Send invoices and payments Encourage the management team to efficiently liaise with the finance team out on the due date wwW.EQUER,cO.UK EQUE2 AVOID PROJECT DEBT BY USING ACCURATE DATA Discover how accurate data can offer further ways of mitigating non-payments and project debt by downloading: Cach construction project comes complete with a large arrount of data - and keeping a clear view of it is the key to financial success. AVOID PROJECT DEBT BY USING ACCURATE DATA % DOWNLOAD NOW