News

Balfour Beatty in ‘pay for early payment’ pilot

Story for CM? Get in touch via email: [email protected]

Comments

  1. So we nearly got rid of pay when paid and have replaced it with pay to get paid.

    What will the finance whizz kids think up next?

  2. I can only see this adding more cost to construction projects. I find it incredulous that these debates are taking place when in the vast majority of Public Sector contracts there should be clauses that insist MC’s offer the same terms to suppliers as they have, that is back to back. Given that the Public Sector should pay in a maximum of 30 days why does the problem exist? The answer is as per usual, lack of contract management, culture of power and bullying. Changing the process will not address the real issues in the industry. Let’s get real and drive culture change through collaboration, transparency leading to trust and changed behaviours.

  3. re-David Benson – I completely agree with your stance, I can only hope all clients follow your lead, but I would imagine the majority of the clients to these Tier 1 contractors are the public sector, so they will be paying the Tier 1 guys within 30/60 days so that the public accountants can claim they’re doing everything to help the construction industry, when they are in fact endorsing better profits for the Tier 1 contractors. It would be interesting to see which banks will provide this financing (I can only assume they will be the ones the Government has a stake in – therefore they will be indirectly earning more money off the Supply chain). Finally; can you imagine trying to chase a payment – Tier 1 QS ‘we’ve passed it to the financer, chase the bank’ – Financer ‘we’ve received no notifications, chase the Tier 1 contractor’ ad infinitum or maybe until the 120 days have expired.

  4. There can be no justification for any Tier 1 contractor to withold payment to its supply chain once it has been paid by its client under the terms of the contract. The position that Carillion has put forward, is to my mind untenable and unethical and speaking as a client, I would not wish to engage with any contractor who had terms of payment that exploit the life blood of the industry. I would call on all clients/client bodies to outlaw this practice and not engage with those who have or are proposing to take it on board. It is time for change!

  5. It is very important to make a ‘clear water’ distinction between 1) a contractor being offered the option of paying interest, to be paid ahead of already reasonable contract terms, and 2) that contractor being put in the position of having to pay interest simply to get paid in a reasonable time.
    Those operating along the lines of option 2) are benefiting from confusion between these two industry scenarios. Even 1) might lead to trouble further down the line, but 2) should be outlawed.

Comments are closed.

Latest articles in News