Engineering services optimistic despite persistent payment issues
ECA, BESA, SELECT and SNIPEF study shows steady growth in Q3 2018, despite ongoing payment and retention problems across the sector
15 November 2018
The latest quarterly sector-wide Building Engineering Business Survey, sponsored by Scolmore, 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 per cent) of buyers inserting under-30-day payment clauses in their contracts.
Despite this, over three in four engineering services organisations (77 per cent) say turnover increased or remained steady in Q3 2018, with nearly eight out of ten (78 per cent) predicting their turnover will grow or remain steady for the current quarter (Q4 2018).
Buyers in the commercial sector were identified as the worst payers, with over eight in ten (83 per cent) saying they received payment more than 30 days after commercial work. For public sector work, on average, 71 per cent of respondents were paid after 30 days. Overall, almost a fifth (19 per cent) were paid after 60 days.
Retentions were held against nearly two thirds (58 per cent) of survey respondents. More than half (52 per cent) said that between 1 and 10 per cent 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 multi-billion pound industry, mainly regarding their performance in Q3 (1 July to 30 September 2018), and expectations for Q4.