It pays to pay promptly – our commitment to the Prompt Payment Code

The collapse of Carillion in 2018 didn’t come as a surprise to many. Among the symptoms of cashflow issues was their notoriety for being a slow payer, taking up to 120 days to settle their invoices. While sometimes necessary, it’s hard not to see the culture of gradually extending payment deadlines as exploitative, often rendering smaller contractors and sole tradesmen unable to compete for work, and causing those without cash reserves to have to pay to borrow money to cover costs until payment is made. The end result of this is increased cost and stress to all involved, and sadly we hear more and more often of subcontractors going bust due to cashflow issues before ever receiving payment.

As a result of Carillion’s and other collapses, the voluntary Prompt Payment Code scheme, run by the Chartered Institute of Credit Management on behalf of the Department for Business, Energy and Industrial Strategy (BEIS) is once again in focus. Those signing up to the scheme commit to paying 95% of all suppliers within 60 days (in fact we have pledged to pay quicker than that), and although it is applicable to all industry, within Construction it has hundreds of signatories including many major construction firms keen to show they will pay within a reasonable timescale and do their bit to keep the industry solvent. Currently, displaying its logo is one of the best methods a contractor has with which to communicate its commitment to forthright, honest relationships with new suppliers.

Since the seismic developments of 2018 the PPC seems to have shone its spotlight on the construction sector, recently removing or suspending (and in some cases, later reinstating) big names such as Balfour Beatty, Costain, Galliford Try, Interserve and Laing O’Rourke* in a drive to come down on offenders harder and force them to change their practices with the aim of eradicating late payment culture over the industry as a whole.

At McCarrick Construction, many of our valued subcontractor relationships have been forged over decades of fair practice and teamwork. We have always exercised timely payment schedules and enjoyed the resulting mutual trust. However, in a swiftly evolving market and during a period of growth for the company, it’s also important to be able to express at first glance our intention to deal honourably with new suppliers and clients alike. As such, we are proud to have signed up to the Prompt Payment Code, and its logo on our website and letterhead is a regular reminder of the promise we’ve made to our suppliers and our industry.

*Source: Construction Manager Magazine, January 2020

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