Case study - Lloyd Morris Electrical
“Primarily we work with three utilities companies under framework arrangements which ensure successful delivery by all within a collaborative supply chain arrangement. As a business we currently turnover £12 million, with the utilities portion worth around £9 million.
“Currently we are owed nearly £600,000 in retentions, which comprises current contracts and completed contracts in the last 18 months. The effect of having over half a million pounds in retention has a serious effect on our cash flow and ability to trade.
“Our accounts department spend days and days chasing retentions, and on some occasions, we have had to resort to sending legal letters to gain release of retention monies we are owed.
“We were informed at a recent client hosted framework suppliers conference that they do not hold retentions on tier one suppliers (principal partners), however the main contractors hold retentions on their strategic sub-contractors of which we are one (tier two supplier).
“The other major concern is that the main contractors hold the retentions in their own bank accounts, and should they go into administration/liquidation the subcontractors lose money that is rightfully theirs with no means of recompense!
“Any changes that can be made by legislation to close the scope for unfair trading conditions would be greatly welcomed.”