With the turmoil in the financial markets fresh in our minds, I think of what must be the biggest problem in our industry – poor payments leading to poor profitability.
In this harsh economic climate, fair payment is more important than ever, particularly for small to medium-sized businesses that really feel the pinch when invoices are not settled on time. Even some of our major companies in the sector are reporting substantial reductions in profits over the last year. Improvements have to be made now. Every firm has the right to receive the correct payment, on time, as agreed.
At the start of the year, the ECA fully supported the Specialist Engineering Contractors (SEC) Group as it successfully lobbied to bring about the Fair Payment Charter, with project bank accounts and the scrapping of retentions at the heart of things.
The Guide to Best Fair Payment Practices has already gone some way to solve the problem. I urge members to continue to support the charter and help us monitor its success. Inform us if you are working on a job where the charter should apply, but it is clearly not.
Equally, continue to share your success stories with us if payments or profitability have improved remarkably.
In addition, the Better Regulation Executive (BRE) has underlined the need for certification bodies and insurers to reduce the administrative burden they place on business and the need to rationalise prequalification schemes. Not only does the ECA support this view, we are forcefully making the point to the government, Constructionline, Achilles, Exor and other scheme operators.
Continuing to do what we did yesterday is not an option. With the industry’s support we hope to establish best practice throughout the construction supply chain.
Electrical and Mechanical Contractor