Case study - NRT Building Services Group Ltd
“We are an SME electrical contractor, and also a member of ECA. Like many firms, average payment terms for monies owed to us are between 45 and 60 days. In the past 12 months, two of our existing clients have asked us to go to 90 day payment, which we declined and have chosen to no longer work for those two companies, but that’s a tough decision.
“Some of the businesses we work for offer earlier payment on extended payment terms in exchange for a fee of up to 3% to get paid on time. However, our profit margins not much more than 3%, making this completely unviable and unfair in any case.
“We spend a lot of money investing in training and apprentices, but this is unfortunately one of the first areas we need to cut back on when we are paid late.
“In terms of retentions, as a business we currently have £252,000 being held, of which £117,000 is work currently ongoing and £135,000 is jobs that are finished with no outstanding problems.
“Sometimes your money can be held in retentions through no fault of your own. On a construction site there could be 20 different trades that participated, and your money could be held back because somebody else has not resolved a dripping tap, for example. Despite the Construction Act, pay when certified is still rife!
“If the Aldous Bill enters into law, this could make a massive difference by ensuring monies owed to us in cash retentions are not unfairly withheld from our business.”