Builders Merchants Federation boss says new industry payment charter is “disappointing”
The Builders Merchants Federation (BMF) has called for publication of construction firms’ payment terms to be made mandatory, just days after industry leaders unveiled agreement on a voluntary payment charter.
The government-backed payment charter, the outline of which was unveiled by the Construction Leadership Council this week, states that signatories will introduce 60 day payment terms as standard immediately; 45 day terms from June 2015; and 30 day terms from January 2018.
However, details of how the agreed payment terms will be monitored and enforced are still being worked out.
But BMF managing director John Newcomb said that while the charter was a “a useful first step” it was “disappointing that it will take almost four years to get to a situation where invoices are paid on normal terms”.
He added: “We would like to see this important issue elevated to board level, requiring mandatory disclosure of corporate payment practice as part of the auditor’s report.
“Our main concern is that there is no compulsion on contractors to sign up to this charter, or the government’s existing Prompt Payment Code and no teeth behind either to ensure that those who do sign up uphold their intentions.
“Without the threat of penalties, I fear that smaller companies, including merchants, will continue to suffer through late payment of invoices or by being forced to accept a longer settlement period than normal.”