Friday 13th September, 2013

Reports in Construction Enquirer point to the latest move within the industry to speed up payments along the supply chain with the news that Keir is set to offer reverse factoring. So far Balfour Beatty, VolkerWessels and Carillion have piloted or introduced payment schemes for subcontractors to speed up payments.

Other majors like Galliford Try, ISG, Wates and Willmott Dixon are also considering offering reverse factoring. Standard payment terms of 60 days are still being offered, but those who need payment before this will have a fee attached for earlier payment.

Carillion remains the exception and sparked controversy when it introduced 120-day payment terms as part of its Early Payment Facility earlier this year. If specialist contractors want to be paid earlier, they have to pay a charge to the bank which is set out on a sliding scale depending on how early they wish to be paid.

Finance director Haydn Mursell said: “We have spoken to banks about setting up a facility and are in talks with some of our subcontractors about it. We are looking to implement it in a gentle way with subcontractors that want to do it rather than imposing in on our supply chain.

Last month Carillion revealed that more than 200 subcontractors and suppliers have signed up to its early payment facility. The contractor said that more than £126m of supply chain payments have been made earlier as a result, and claimed 76% of invoices have been paid earlier than they would have been before to the introduction of the EPF. The average supplier payment period under the arrangement has been reduced by 14 days.