According to professional services specialist, StreetwiseSubbie, subcontractors are increasingly financing their main contractor's cash flow.
Former electrical contractor and co-founder of StreetwiseSubbie, Barry Ashmore, is now a 'professional construction law expert' and stated:
“By paying less than is owed and withholding payment for up to 120 days in some cases, some of the UK construction industry’s main contractors are using the money they owe subcontractors to finance their own business growth – it’s just plain wrong.
“Not only is this practice unfair and unjust, it is destroying the heart of the industry and literally biting off the hand that feeds it! As a direct result of late and withheld payments, six construction firms are going bust every day*. That is scandalous and the pathetic attempts to fix the problem such as the Construction Leadership Council’s voluntary agreement where signatories agree to pay all suppliers within 30 days from 2018 amounts to putting a sticking plaster on a gaping wound.”
“Specialist Contractors are consistently told: “accept our onerous terms or you don’t get the work”. Accept crippling payment terms or lose out on the business? That’s what I call a real rock and hard place. Our subbies have nowhere else to go and no other choice but accede; it’s a disgrace.”
Ashmore also highlighted a fact from a recent Bibby Financial Services report that '51% of SMEs are waiting more than 30 days for payment'.
“We’re going backwards in this country and the government and so called industry leaders know what is going on but either don’t care, or are too mired in self-interest to do anything about it.”