SME bosses go without wages due to late payment abuse

Grant Prior 8 months ago
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Nearly half of small contractor owner have been forced to stop their own wages due to payment delays by bigger firms.

New survey findings from engineering services trade bodies ECA and BESA reveal the devastating impact of unfair payment on construction.

Three-quarters of business owners said they had made sacrifices forced on them by late payment.

These included reducing their own salary (37%) and cancelling company training activity (23%).

Over one in three said they struggle to pay business taxes due to payment issues.

Nearly one in ten employers were also forced to pay their own staff late.

ECA Director of Legal and Business Rob Driscoll said: “This ground-breaking data shows the truly devastating effects late payment has on the lives of business owners, their staff, their children, and their wellbeing.

“With a lack of fair payment directly causing widespread mental health issues, abusive payment practices fundamentally remove the capacity for individuals to feel purpose or value in a sector which enables £540bn GDP within the wider UK economy.

“The data lifts the lid on the industry’s self-harming commercial behaviour.”

Nearly one in three respondents said late payment caused staff morale to drop, while nearly one in six said it led to a fall in productivity.

A staggering 92% of people said their business had faced payment issues and 65% said they were paid late frequently or very frequently.

BESA Director of Legal and Commercial Services Debbie Petford said: “These figures are a timely reminder that unfair payment practices place significant and unnecessary burdens on owners of construction SMEs and their employees.

“Urgent reform is required to prevent companies inappropriately using retentions money owed to smaller businesses down the supply chain to prop up their cash flow.

“The status quo is both economically unsustainable and detrimental to the wellbeing of hardworking people in our industry.”

The survey also revealed that, as a direct result of late and unfair payment, over nine in 10 business owners in construction are suffering from a range of mental health issues.

 

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