Wise Up Wednesday: More Payment BS and Don’t Expect A Miracle At Christmas!
Contractors Are Not Paying So What Can You Do?
This edition of Wise up Wednesday is sticking with the theme that Contractors are not paying their subcontractors properly!
There we are we’ve said it, everybody knows it, so my advice to Contractors is:
Stop BSing about it! Nobody believes you anymore!!
In the latest round of BS, Graham executive chairman Michael Graham has stressed the “importance of paying subcontractors on time in order to keep them on jobs.”
In an interview at the Construction News Summit, he said: “Supply chain members need to be paid within the terms of the contract. You can’t ask people to do things and not pay them properly.”
What’s Wrong With That?
If you’re sat there thinking that all sounds perfectly reasonable what’s wrong with that? Then here goes;
1. Paying subcontractors “on time” is NOT the same as paying subcontractors within a reasonable period e.g. 30 days!
2. Paying subcontractors “within the terms of the contract” is NOT the same as agreeing fair and reasonable payment terms!
3. Paying “on time” and “within terms” is NOT the same as paying them properly in other words not hacking big lumps off what is owed by issuing Pay Less Notices!
4. And please don’t insult subcontractors intelligence by saying you have to pay them on time to “keep them on jobs”. Paying less than is properly owed is NOT grounds to suspend performance.
So, all in all let’s cut through the BS and talk about Paying Properly!
The Facts Are Plain To See
In the last blog I highlighted the Construction Enquirer report about “endemic” payment abuse among some tier one firms following a recent spate of specialist collapses.
One leading specialist trade body said: “Our members feel that payment abuse is endemic with certain tier one contractors. Specialists are funding work undertaken for nearly six months when you add up all the tricks and turns the tier ones use.
Specialists have also highlighted the growing use of Pay Less Notices, contra-charges and contract amendments”
Last Time I Asked: “So What Are Trade Bodies Doing About It?”
It is fairly apparent that Build UK and its Trade Association members are quite simply failing to protect Specialist Contractors.
They continue to espouse the same old BS too!
Remember the enthusiasm for;
# The Aldous Bill to ban retentions – didn’t happen!
# Prompt Payment Code – totally ineffective!
# Government mystery shopper – what a load of rubbish!
# Project Bank Accounts – hardly ever used!
Our offer to talk to Trade Bodies and government remains open, but in the meantime we are getting on with the job of protecting specialist Contractors.
And Don’t Expect A Christmas Miracle!
Whichever bunch of Muppets we elect, you can rest assured that tackling payment abuse in the construction industry won’t even register on their radar. And even if it does I will guarantee that there will be more meaningless consultation.
NO – NO – NO! For pity’s sake we KNOW what the problem is!
What we need are solutions with real teeth!
In The Meantime – Protect Your Interests
In case you missed them here are the seven quick tips you need to take to protect your business;
1. Check Who You Are Contracting With
Check the financial status of those that want you to work for them. If the Contractor/Client you’re working for goes bust you will get nothing!
Watch out for contracts that allow the Contractor not to pay you if the Employer becomes insolvent.
2. Scope of the Works/Variations
It’s a chore but you should carefully check that the scope of works in the contract matches what you have priced.
At best Contractors don’t care if you get it wrong – their terms will protect them. At worst some Contractors will deliberately manipulate this.
If you’re having trouble agreeing variations, escalate don’t procrastinate!
Make sure the contract period is agreed and properly documented before you start the works.
Don’t agree to work “in accordance with the Contractor’s programme” or “in accordance with his directions.”
4. Send Notices
If you get delayed you must send notices – don’t be persuaded otherwise.
Failing to protect your interests in respect to time can prove extremely costly!
5. Price and Discount
If you have made important qualifications in your tender make sure they are not lost when the contract is formed.
6. Check The Fundamentals
Make sure you know the fundamental basis of the contract (e.g. lump sum, re-measurable, cost plus) and therefore who is taking the risk of quantifying the scope of the works.
7. Payment Terms
Make sure the payment terms are clear, unambiguous and that you understand them.
Ensure you know what to do if you start to get paid late or less than you have claimed.
Contractors Are Not Paying You? Do Not Procrastinate – Act Immediately
Remember, if you do run into any kind of problem StreetwiseSubbie has a nationwide network of Consultants to help you solve your problems by bringing you cost effective resources to help make your life easier and your business more profitable.
By working with our Service Delivery Partners across the country, we bring you professional support in all the essential areas of your business.
And, because we only work with Specialist Contractors you can be sure that we know the kind of problems you face, and the solutions that work best. Which saves you a lot of time, and a lot of money.
What to Do If Contractors Are Not Paying You
So please feel free to give us a call on 01773 712116 or email us here.
Please remember that if contractors are not paying you we are here to provide solutions exclusively for Specialist Contractors. If you have a business problem, not sure what to do or just want a second opinion, then we are here for you. Please give us a call on 01773 712116, or email today.