Delivering on our commitment to improve payment practices
Late payments are a thorn in the side of smaller firms in the construction supply chain. That’s why we have placed an ongoing focus on doing all we can to reduce the time we take to pay our suppliers.
Ahead of the filing of our latest payment practice statistics, Neil Washington, our finance director, provides a breakdown of our results.
Late Payments in the Headlines
Quite rightly, the issue of late payments has attracted negative headlines in the construction industry and large companies are now required to report on their payment practices every six months.
So, with the deadline for businesses to file their latest available data falling this week, some may be nervous about what the statistics will reveal. Here at Novus, however, we’re happy to report that our commitment to reducing payment times is continuing to bear fruit.
Delivering on our Commitments
The data for the first half of the year shows that we took an average of 29 days to pay our subcontractors. This is an improvement on the already high standard we set ourselves for the same period last year, which was 30 days.
To put this in context, according to Construction News’ latest analysis of payment-practice reports, the industry’s largest contractors took an average of 43 days to pay suppliers.
It’s not just there where we’ve continued to make improvements. We also now pay 57% of our invoices within 30 days, up from 52% for the first half of 2018, while the proportion of payments outside of terms are down year-on-year.
Continuing to Pay on Time
Of course, our work doesn’t stop here and we will continue to focus on this issue. Contractors and their supply chains are dependent on each other’s success.
Prompt payment means that subcontractors can maintain healthy cashflow levels, increasing the likelihood of them accepting more work and consistently carrying out quality jobs. Late payment can also have a massive impact on cashflow, increasing the likelihood of insolvency.
At a time of skills shortages, reduced access to labour and economic uncertainty, it’s vital that bigger players in the industry are doing all they can to ease the burden smaller firms face.
Construction News Payment 100: Where Do Novus Rank?
On 14th January, Construction News published its annual analysis on payment practices within construction. So, how do Novus compare to the rest of the industry?