Carillion payment terms “grossly unfair” - NSCC

Carillion is believed to have moved its payment limit from 65 days to 120 days as part of its Early Payment Facility which, the contractor says, supports the Government’s Supply Chain Finance Initiative, announced by Prime Minister David Cameron in October. Under Carillion’s new terms, subcontractors who want to be paid before the four month deadline will have to pay a charge, set out on a sliding scale, depending on how quickly they would like the cash. However, the new Late Payment of Commercial Debts Regulations 2013, which came into force on 16 March, require businesses to pay their suppliers within 60 days, with interest being charged on any late payments. The NSCC believes that the implementation of the 120 day payment terms by tier one contractors is “grossly unfair” and has written to the Government as part of its ongoing Fair Payment campaign. A spokesperson said: “Given the bargaining position of tier one contractors compared with the majority of business in their supply chains, it is difficult for specialist contractors to negotiate on payment terms and they have little or no practical choice other than to accept what is proposed or they risk losing the work. “Cash flow is of vital importance to the specialist sector and a payment cycle of 120 days is very onerous even with the opportunity, but no guarantee, of earlier payment.”

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