Is Construction Sector Facing a Late Payment Epidemic?

by | May 7, 2019 | Bad Debt, Debt Claim, Debt Collection, Debt Management, Late Payment | 0 comments

In the UK, currently some 30% of all late payments are in the construction sector. There is £30 billion owed in outstanding invoices to small and medium sized building firms. The National Federation of Builders (NFB) has recently raised this as an urgent, if persistent, issue.

An earlier study from the Building.co.uk website recorded that up to 16% of small firms’ annual turnover was stuck in money owed in unpaid invoices.

As an industry with squeezed margins and tightening cash-flows, construction is prey to late payment, and many smaller firms fall victim to larger companies’ cavalier payment practices.


The Department for Business, Energy & Industrial Strategy (BEIS), has announced the introduction of new late payment legislation designed to make the workings of larger companies more transparent.

This will mean them having to disclose payment terms and resolution processes, along with imposing limits on payment periods.

There should be a sense of urgency to any action: many SMEs in the construction sector employ local workers and train local apprentices. They are grassroots businesses, contributing to their immediate economies. Late payments ultimately jeopardise this economic growth.

It is also the case that on large-scale projects, often in the public sector, contractors can find that periodic payments are delayed during work. If disputes arise, this is then also costly on a wider scale, to the taxpayer.

If there is an aim of government economic policy to initiate regeneration through infrastructure projects, then ensuring people are paid on time should be established from the outset.


Regardless of legislation, there are actions construction firms can take to help prevent or deter late payment.

These include setting out clear, binding payment periods in your terms and conditions at the outset. Terms and conditions should also state that interest will be added for late payments.

It is also vital to be diligent and persistent in chasing outstanding invoices. This should be a fully-integrated credit control procedure.

Create a financial buffer zone through sound management of your money, so that if late payment occurs, you can ride it out until you have recovered what is owed to you.

And when it comes to debt recovery and enforcement, please Contact Jan Firth on 01706 941 400 or via our contact page to seek professional advice and support.

We want to help you access the potential of the law.