KIER GROUP is reportedly planning to charge subcontractors 1.5% of their package turnovers to become closer strategic partners, in an effort to promote better supply chain relationships.
There are growing concerns that this report is only the latest in a series of measures across the construction industry that are fuelling a ‘pay to get paid’ culture. In practice, this forces many subcontractors, including SME construction companies, to get paid less than they are owed in exchange for a steady cash flow.
Prompt Payment Code Misconduct
Despite being a member of the Prompt Payment Code, which expects businesses to pay 95% of their invoices within 60 days, Kier takes more than 61 days to pay 18% of its bills. In addition, Kier takes an average of 42 days to pay its invoices, with 64% not paid within agreed terms.
Richard Beresford, chief executive of the NFB, said: “Companies who have managed their spreadsheets poorly should not expect subcontractors to pay for their failures. If we’re to work as one, the first step is to treat your supply chain as you would want to be treated.”
Neil Walters, NFB national chair, said: “The reports surrounding Kier’s ‘Working as One’ initiative are an insult to the Prompt Payment Code, the supply chain and the construction industry. There is no place for a ‘pay to get paid culture’ in our industry.”