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UK contractors potentially put at risk by delayed payments

Category: Invoice Factoring — Paul Morgan on September 27, 2012

One of the biggest housebuilders in the UK could be putting small companies in the construction industry at risk, due to delaying payments.

The news that Keepmoat, which only last year opened an office in Glasgow, is to lengthen its standard payment terms has caused ripples of worry and anger throughout the building trade. It is understood that the Doncaster-based company is to extend its terms by almost half.

At a high level, there are concerns that main contractors could see significant disruption to supply chains. However, the greater worry is for small companies, which are already being affected by outstanding invoices.

Others said the move could result in many smaller companies missing out on contracts, with them being forced to pay their own bills later than desired. One subcontractor who did not want to be named said:

“We are under so much pressure now from the suppliers you would not believe.

“Our suppliers want paying in 30 days.”

A statement put out by the government agreed with this sentiment, with the spokesman saying:

“[…] small companies waste time and incur costs when they have to run around chasing payments.”

However, there is help available, with Scottish invoice discounting and factoring firms able to provide instant cash to the value of the invoices, and organise the collection of outstanding payments.

It is reported that Keepmoat has already extended some payment terms from 35 to 49 days. Furthermore, there are also reports that some terms could be extended by as much as 60 days.

The firm, which is responsible for major regeneration projects across the UK, declined to comment on the concerns.

'Disclaimer: The information contained in these articles is of a general nature and no assurance of accuracy can be given. It is not a substitute for specific professional advice in your own circumstances. No action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a consequence of the material can be accepted by the authors or the firm.

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