Poor payment practices in roofing and cladding worsen
NFRC is calling for harsher penalties for late payments, which go beyond the Fair Payment Code and new duties to report.
NFRC’s latest State of the Roofing Industry report has revealed that 45% of respondents experienced delays getting paid in quarter three of 2024. The proportion of those not paid within 45 days of a job’s completion rose to 39% in quarter three, up from 29% in quarter two. This follows a worrying trend that has seen the proportion of Members not paid within 45 days steadily increase since this survey began in 2020.
The downsides of late payment are clear, and construction experienced more insolvencies in the year to September than any other sector, at 4,264, according to BCIS (The Building Cost Information Service). While this is a 0.7% decrease from the insolvencies to September 2023, construction insolvencies remain 32.5% above prepandemic levels.
“Late payments put firms at risk of never being paid and there are numerous NFRC Members who experienced heavy losses when ISG collapsed,” says Talman.
“The lack of accountability and consequences for late payment is exploited by some companies at the expense of those smaller businesses they subcontract to, and it is harming the sector’s productivity,” says Talman.
NFRC Members who were owed money when ISG collapsed told us the following:
“We were taken for granted.”
"They knew there were issues and, as usual, we were led along."
"ISG were awarded substantial contracts by the government framework for public sector contracting (schools and academies etc). How has the supply chain been let down so badly?"
“The cash flow management challenges the construction sector is subject to do not have to be so crippling,” says Talman.
“At the very least, there must be safeguards in place to ensure government work is awarded to stable businesses who pay their suppliers and subcontractors on time.”
NFRC was encouraged by the launch of the new Fair Payment Code and its improvements on the Prompt Payment Code.
However, Talman says, “The government will have to go much further than a voluntary code and badges to combat endemic late payments that unfairly benefit those who exploit agreed terms”.
NFRC will closely monitor the total amount of payments which are not made within a payment period and the percentage of invoices that are not paid within a period due to a dispute, data which will be included within new payment reporting requirements in 2025. Poor performance in these areas must have a direct impact on who is awarded government contracts.
“It is imperative that the Procurement Act 2023 due to be implemented next year, considers payment practices and departments act on the data,” says Talman.
Overall, NFRC’s latest State of the Industry Report shows an uptick in workload for our Members, following the general economic slowdown during the change of government. A balance of 29% of respondents reported overall growth in workload in quarter three of 2024. NFRC eagerly awaits further details of the government's growth plans, particularly the 2025 spring spending review, and hopes that a stable future helps address the disproportionate insolvencies happening across our sector.
Download the Q3 report here.
