#WiseUpWednesday: Dangers Of “Early” Payment Schemes
If you’re being offered an “early payment” or “draw down” scheme our advice is read and understand the small print.
There are a number of Main Contractors offering variations of what’s known as supply chain finance, and Balfour Beatty, Carillion, ISG, Kier, Mears, Wates, Willmott Dixon, and Morgan Sindall, are all understood to have tried, or are pushing such schemes.
They all go under different names. For instance, Carillion’s is known as the Early Payment Facility (EPF), which may sound benign, but is it?
As with every one of these schemes we have reviewed so far, the small print contains a number of serious pitfalls for unsuspecting subbies – largely down to the fact that while they enables subbies to get paid more quickly at no, or a small extra cost, they come laden with onerous terms including extending the baseline contractual payment terms to as much as 120 days.
Vital To Understand
As a Specialist Contractor it’s vital for you to understand what the implications are for your businesses of getting involved in these financing schemes. And it’s vital to understand whether – as the propaganda would have you believe – such systems are genuinely designed to benefit you the Subcontractor, or are they instead simply a ruse to help Main Contractors improve their cash positions.
It’s also vital to understand the small print, and the implications of trying to get paid if your account is under-valued, or you are faced with unfair set offs.
So, if you are contemplating signing up to any supply chain finance scheme please be aware of the potential pitfalls and concerns. The idea of being paid early may initially appeal – but you need to know whether the specific terms and conditions have the potential to ultimately leave you substantially worse off.
Take action to safeguard your business from the onerous terms that accompany such schemes, and the impact of reduced, late, or non-payment in 2016.
If you don’t then it could cost you your business…
Unscrupulous Contractors use every trick in the book, to reduce and delay payments. Specialist Contractor’s efforts to avoid or rectify this problem often come too late in the process.
Don’t be one of the casualties, take action now.
You can download a complimentary “How To Get Paid” report right now, and put an end to reduced, late and non-payment.
And you can call us for initial no cost advice on 01773 712116, and our Gold and Platinum Buddies can use their commercial and contractual consultancy to find an answer.
Whatever level your business is at, and whatever your specialisation I want to encourage you to experience and enjoy a better more profitable, less stressful way.
I hope you enjoyed my Wise Up Wednesday and that it gave you some food for thought, and please don’t hesitate to grab your Complimentary Report at “How To Get Paid”
And if you need any help with any of your business problems pick up the phone and give us a call on 01773 712116.