NSCC blasts use of 120 day payment terms as Carillion introduces new arrangements

National Specialist Contractors' Council (NSCC) Chief Executive Suzannah Nichol MBE has blasted 120 day payment terms as ‘unacceptable both commercially and ethically’ as Carillion increased its maximum payment terms to suppliers to 120 days as part of its new Early Payment Facility (EPF).

Suppliers can receive payment earlier than 120 days by applying to the appropriate bank after their invoice has been approved, although this arrangement is subject to a charge. Although it is not contractually documented anywhere, Carillion has said that it will be reimbursing all bank charges paid by suppliers who reduce their actual payment terms to 45 days. Building Magazine has reported that ISG, Galliford Try and Willmott Dixon, along with Balfour Beatty, are also investigating introducing similar systems.

The BWF is determined that its members benefit from fair and transparent payment practices throughout the supply chain and have the right to receive full and correct payment as and when due. As NSCC members we are supporters of the Fair Payment Campaign which has the objective of achieving proper and timely payment and the elimination of retentions throughout the supply chain to improve the quality and delivery of construction projects. The campaign promotes 30-day payment terms and we view extended payment terms as ‘grossly unfair’ to the supply chain in accordance with the Late Payment of Commercial Debts Regulations 2013.

NSCC Chief Executive Suzannah Nichol MBE commented:

"The way in which Carillion have told us they are operating their Early Payment Facility means that Specialist Contractors are being paid in 45 days at no cost to them.  But let’s not kid ourselves; 45 days is only ‘early’ when your standard terms are 65 days.”

“NSCC believes, and has consistently stated through its Fair Payment Campaign, that 30-day payment terms are normal.  We cannot see why Carillion has extended its payment terms to 120 days; it just complicates an already complicated payment mechanism!   Contractual payment terms of 120 days are unacceptable both commercially and ethically.”

“It has taken us a while to understand Carillion’s Early Payment Facility and Supplier Incentive Scheme.  We have met with Carillion representatives to discuss its objectives and they have clearly stated that their intention is to pay their supply chain early.  We have also taken legal advice to interpret the various documents so that we can advise our members.   It has taken a lot of effort and, if we have found it hard, I am not sure how a busy Specialist Contractor is supposed to understand it."