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Late payment 'drives business owners to depression and suicide'

7 November 2019 | By Neil Gerrard

The pressure of being paid late or unfairly is driving business owners in construction to a range of "significant mental health problems" including depression and suicide.

That's according to the Electrical Contractors Association (ECA) and Building Engineering Services Association (BESA), which have conducted a survey in association with 25 other construction trade bodies examining the effects of the problem.

Nine in 10 business owners reported mental health issues as a result of late or unfair payment.

The mental health problems included:

The issue was also found to affect employees right across a business, including CEOs, directors, managers and executives. Worryingly, of all the respondents to the survey (including both business owners and employees) four said they had attempted suicide as a result of late payment, while 80% reported a mental health issue.

And four in 10 of all respondents said that payment issues had strained their relationship with their partner, with 5% reporting it caused it to breakdown entirely.

Over nine in 10 respondents (92%) said their business had faced payment issues. Almost two-thirds (65%) said they were paid late frequently or very frequently.

ECA director of CSR Paul Reeve said: “Everybody expects business to deal with everyday pressures, but stress and other mental health impacts come from sustained and excessive pressure. It’s absolutely clear from these findings that poor payment is a serious cause of mental health issues across the industry and that the problem, far from being isolated to certain individuals, is commonplace among top management.

“These problems quickly knock on to employees and families alike. Findings such as these mean that clients and other buyers need to greatly improve their approach to supply chain payment and it’s a sad reflection on the industry that it will probably take legislation to achieve it.”        

BESA CEO David Frise added: “Systemic payment abuse causes broken lives and broken buildings and must be stamped out. The economic damage of these practices is well known but this survey has shed light onto its devastating human cost. Thousands of owners and workers of SMEs have struggled and suffered with this abuse for too long and with a general election underway they will be reflecting upon who will most likely represent their concerns.”

Comments

Late payment has been, is and will continue to cripple the industry, there is not a week goes by where companies are folding and within the resultant fall out late payment is mentioned.

There is a real gap in which those main contractors with integrity should step forward with true Fair Payment Practices rather the wooly commitments

Sean Seal, 7 November 2019

Late payments has been a common problem for far too long now, something has to be done about it because it is ruining the industry.
I don’t think all the quantity Surveyors who find it so easy to put a red pen through work that has clearly been carried out who walk round the office given high fives to each other and claiming bragging rights because they’ve bashed a sub-contractors application, I have witnessed this on several occasions.
I think the industry needs a governing body for companies who are treated unfairly and sometimes exploited,used for interest free loans.
I would happily pay into a scheme like this as it would benefit me.

Dave Robertson, 7 November 2019

The whole industry needs a shake up when it comes to payments. No other industry would tolerate or permit the payment terms subjected to sub-contractors within the construction industry. Retentions are archaic and need abolishing altogether. Payments should be made on 14 days at the absolute latest. If main contractors cannot afford to do this then their business model clearly isn't a sustainable one. Sub-contractors should not be used to "bankroll" projects. Time for change, time to improve the industry for all involved.

Matthew Bowden, 7 November 2019

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