The latest quarterly survey of National Federation of Roofing Contractors (NFRC) members has revealed that the issue of late payment is worsening.
45% Experience Payment Delays
According to the NFRC's State of the Roofing Industry report, which covers the third quarter of 2024, 45% of respondents experienced delays in receiving payment. Furthermore, the proportion of roofers who did not receive payment within 45 days of completion increased to 39% in the third quarter, up from 29% in the second quarter. This trend has been steadily increasing since the NFRC began surveying its 1,200 member firms in 2020.
Poor Payment Practices Continuing
"Poor payment practices continue to unfairly strain the finances of roofing and cladding businesses, particularly during a period of record insolvencies within the construction industry," stated NFRC Chief Executive James Talman. Late payments put firms at risk of never being paid, and numerous NFRC members have experienced significant losses, such as when ISG collapsed. Some companies take advantage of the lack of accountability and consequences for late payment, exploiting smaller businesses they subcontract to, which ultimately harms the sector's productivity. The collapse of ISG, a company that was awarded substantial contracts by the government framework for public sector contracting, including schools and academies, has raised questions about how the supply chain was let down so badly.
Cash Flow Challenges
Talman emphasized that the cash flow management challenges faced by the construction sector do not have to be so crippling. He believes that, at the very least, there must be safeguards in place to ensure that government work is awarded to stable businesses that pay their suppliers and subcontractors on time. The current Fair Payment Code and new reporting duties are inadequate, according to Talman. He stated that the government will have to go much further than a voluntary code and badges to combat endemic late payments that unfairly benefit those who exploit agreed terms.
