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Workshops and Online Systems Offer Solutions to Curb Late Payments

The Government released a new regulation to target late payers, whereby late paying contractors could be potentially banned or excluded from future, major projects.

The new measures will target large companies operating in the public sector. But in the last few weeks it has come to light that private sector clients and developers have been advised to adopt the same measures in order to avoid late payments.

What are the solutions to help prevent tardy payments from occuring?

The new measures, delivered by Cabinet Minister Oliver Dowden, outlined that companies will face punishment if they do not practice fair payment. In effect, the measures will make it easier for subcontractors to report poor payment methods to the authorities.

In order to reduce the occurrence of late payments, the Government is offering advisory workshops to help companies with their project management and payment plans. Solutions such as these should help prevent any tardy payments, ensuring that employees and businesses do not suffer as a consequence.

The news comes in lieu of the collapse of Carillion in January, where the giant construction firm was found to have paid subcontractors up to 120 days late. There could be a variety of reasons as to why late payments were made, but it is safe to say that in an ideal world no business wants to add to the stress already evident during the invoice and payment process.

The Carillion case begs several questions as to how and why payments were so late. Of course, all contractors desire a risk-free environment in which their payment plans are rigorous, safe and reliable; while ‘risk-free’ may be too ambitious, having some sort of supporting structure for application and payment processing allow contractors to be more organised and efficient.

A potential solution is to digitise all payment and invoice processes so that both contractors and their subcontractors experience improved visibility and control of applications, and ultimately enhance their compliance with legislation. WebContractor is a useful tool which alleviates both mounting paperwork and time spent receiving calls chasing payments, while also supporting the timely processing of applications for payment.

The Government’s new measures offer an opportunity for both the public and private sector to push for change in the industry in order to minimise any negative impact on business continuity and should be viewed as a catalyst for positive change. The change will see the implementation of new processes and procedures supporting the timely payment of subcontractors, reducing risk and safeguarding jobs.

Turning to a more rigorous, digital application and payment process will preserve business integrity and the wider construction industry as a whole.

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