Engineering services optimistic despite ongoing payment problems

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The latest quarterly sector-wide Building Engineering Business Survey has shown steady growth in Q3 2018, but ongoing payment and retention problems continue to be rife across the industry

The quarterly survey is carried out on behalf of the Electrical Contractors Association (ECA), the Building Engineering Services Association (BESA), the Scottish electrical contractors’ association (Select) and the Scottish & Northern Ireland Plumbing Employers Federation (SNIPEF).

Sponsored by Scolmore, the survey has revealed that up to eight out of ten engineering services organisations say they typically receive payment more than 30 days after the due date. This comes despite over half (56%) of buyers inserting under-30-day payment clauses in their contracts.

Despite this, over three in four engineering services organisations (77%) say turnover increased or remained steady in Q3 2018, with nearly eight out of ten (78%) predicting their turnover will grow or remain steady for the current quarter (Q4 2018).

The worst payers were identified within the commercial sector, with over eight in ten (83%) saying they received payment more than 30 days after commercial work. For public sector work, on average, 71% of respondents were paid after 30 days. Overall, almost a fifth (19%) were paid after 60 days.

Retentions were held against nearly two thirds (58%) of survey respondents. More than half (52%) said that between 1% and 10% of their organisation’s turnover was tied up in retentions.

ECA Deputy Director of Business Policy and Practice Rob Driscoll said: “These figures show that overturning the late payment issue remains the key to unlocking productivity, growth and prosperity, particularly with the uncertainty of the next two quarters.

“ECA will continue to work diligently with Government, the Small Business Commissioner and others to gain further support for initiatives such as the Aldous Bill and help the industry to resolve its long-running, and continually damaging, payment problems.”

BESA Public Affairs & Policy Manager Alexi Ozioro said: “It is great to see more growth in the sector and industry, but it is frustrating to know that the growth figures would be even bigger if late payment was not impacting so many businesses.

“The Government’s recent commitment to legislation on the issue of retentions is very encouraging, and we can only hope that the wider fair payments landscape moves along too.”

SELECT Acting Managing Director, Alan Wilson said: “It’s clear that despite well-intentioned statements from a number of bodies and governments, nothing has altered in the payment regime in our sector. It’s a matter of urgency that this issue, which is the number one priority for many businesses, is tackled quickly and effectively.

“The time for talking is over; we must see some real action to help alleviate the issues our members face.”

SNIPEF Chief Executive Fiona Hodgson said: “These results highlight the urgent need for action to address the culture of late payments within the industry. While there is optimism with predictions of steady or increased turnover, issues with payments and retentions remain a major cause of concern with our members that urgently needs to be addressed. Change is needed now to provide certainty to businesses.”

The survey received 387 responses from companies across the sector, mainly regarding their performance in Q3 (1 July to 30 September 2018), and expectations for Q4.

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