David Stapleton, CEO of TenderSpace, the online platform which helps electricians to connect and collaborate with property and construction professionals, outlines how PE readers can prepare to avoid late payment.
Late payment is a huge problem in the construction industry. In fact, the Euler Hermes Quarterly Overdue Payments Report found that late payments in the construction industry rose by a staggering 27% during 2015. Government figures published in October 2015 also shows that small and medium UK businesses as a whole were owed £26.8bn in late payments.
Lawyers specialising in the construction sector warn that legal issues frequently hold up payments in the sector, amid disputes over when exactly companies and their contractors are entitled to claim payment. Construction companies are hit the hardest by late payments, forced to wait 82 days for invoices to be paid.
There are, however, some steps you can take to make sure you get paid on time. Increasing transparency and collaboration in the construction supply chain is a reason why we launched www.thetenderspace.com, which matches professional tradesmen with property developers, construction and public sector building project managers. When we launched, we included several tools to encourage collaboration and the ability to check the credit risks attached to the people you work with. It allows you to protect your business from late payment issues and target the work you want across the commercial and public sector.
FIVE TOP TIPS FOR GETTING PAID ON TIME
1. Check the credit risk of any potential client
The ability to check the credit rating of potential project partners, main contractors and supply companies is really important. Unless you do a credit check, you just don’t know whether they’re capable of paying you. That’s why the ‘Finance Checker’ is such a valuable feature available to TenderSpace users. ‘Finance Checker’ produces Credit Risk Reports which allow a subscriber to determine the creditworthiness of your business partners in an instant. TenderSpace not only enables you to check the payment trends of a company, it will also notify you if there is any change to a credit rating, helping subscribers to protect their businesses.
2. Get invoices out on time
This is an obvious one, but clearly one of the biggest reasons for late payment. Yes, it is tough when you’re busy on-site, but get invoices out on time, quickly and accurately.
3. Put effort into your invoice design
Make sure your invoices are professional and well designed, containing all the information your clients’ ﬁnance departments (or indeed householders) require, such as Purchase Order numbers. This will help to ensure prompt payment.
4. Late payment fees
If your invoice clearly states payment terms, but a client has not paid them, you could consider a late payment fee. This could be contentious so use it wisely.
5. Shorter payment terms
Some clients want your work as quickly as possible, so why not explain, therefore, that payment terms for certain jobs (such as urgent or smaller undertakings) are shorter than a traditional 30 days.
PE READER OFFER!
TenderSpace has teamed up with PE to offer readers an exclusive ﬁrst year subscription offer of just £140, including 20 credit checks. To take advantage of this great offer, simply add the code PEFeb17 when subscribing for 12 months.