Contractors urged to support suppliers and keep cash flowing

Companies that delay payments to suppliers during the coronavirus pandemic should remember one thing: what goes around, comes around

Industry leaders have issued a thinly veiled warning that anyone looking to play hardball in the current circumstances will find their reputation totally trashed by the time this is all over. This is no time to play heavy or get legal, they warn.

The Construction Leadership Council, which includes representatives from Whitehall and government as well as the industry, said that it was getting “increasingly concerned about the management of payment in the supply chain, and the risk that clients and firms will seek to invoke contractual clauses to the detriment of other firms”.

CLC co-chair Andy Mitchell, who is also chief executive of Thames Tideway, said: “We are clear that all construction businesses should continue to pay in accordance with agreed contractual terms. Similarly, firms should not be threatening to invoke penalty or other contractual clauses, when it should be the priority of all clients and firms to sustain the industry.  Our actions at this time will be remembered.  All firms should think hard about how their reputation could be damaged by not doing the right thing.”

He added: “Every business, large and small, has a critical role in the making sure that cash continues to flow throughout the industry. However, our construction industry task force colleagues [a coalition of trade associations] have brought to our attention that there are number of businesses that have chosen to unilaterally delay payment or extend credit terms. We do not believe this is acceptable or appropriate – particularly at this time of great stress.”

Mr Mitchell’s statement on behalf of the CLC concluded: “Our common enemy is Covid-19, and we need to unite, and work collaboratively to resolve shared problems. We owe it to our sector and the country to take all steps necessary to ensure that the industry is in good health to support the recovery, when it comes. It is everyone’s responsibility to keep money moving in the sector and vital that all businesses play their part by maintaining payment and by managing contracts responsibly.”