Late payment is to do with weak legislation, of which the big boys take advantage.
The legislation allows the main contractor to decide from the outset what the payment terms are and, as long as both parties are in agreement, its perfectly legal. In reality subcontractors have little choice when main contractors impose terms – they entice you with the promise of continuous work.
The main contractor then strings along its subcontractors. In many cases, payment is made after the 65-day term. Subcontractors have to fight for their money and then the contractor, after a long delay, puts an offer on the table which is much less then the amount due. If the subcontractor refuses there are more delays, as the main contractor asks for various details about small changes to the contract.
Don’t forget that while the main contractor is delaying payment to the subcontractor, it has already been paid by the client.
The government should amend the legislation forcing the 30 day payment terms with no alternatives. This will contribute greatly to the efficiency of the industry as whole, reduce cost overruns, time and corruption.
Y Pandor
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