According to the latest survey by the National Specialist Contractors Council poor payment is back as a serious issue in construction.

The quarterly survey showed that just 3% of firms are paid within 30 days, while 24% of those surveyed said they had to wait more than 60 days to settle accounts.

The lengthening payment periods suggest cash is getting tight as main contractors feel the pinch between rising materials prices and  jobs secured at rock-bottom rates.

A rise in cash retentions has further hampered specialist contractors’ cash flows with 85% reporting they had money withheld against them in retention.

Almost half of all retentions are now overdue for release. And firms surveyed were owed on average of over £55,000 each.

The NSCC also warned that cuts in public sector spending were threatening previous signs of recovery in the construction industry.

Although the results for the second quarter of 2010 showed 42% of specialist contractors reporting increases in enquiries and a 39% rises in orders, just 38% of respondents anticipated an increase in workload over the next 12 months, down from 53% last quarter.

As existing work nears completion, the conversion of future enquiries into orders will become critical in the coming months and the Coalition Government’s cost-cutting measures are likely to have a significant impact.

NSCC Chief Executive, Suzannah Nichol, said: “Specialist contractors continue to face difficult trading conditions and this quarter’s results highlight the importance of public sector funding to construction.

“With the industry accounting for 10% of GDP and generating £2.84 in economic activity for every £1 invested in it, the case for maintaining capital spend on construction projects couldn’t be clearer.”