The National Federation of Roofing Contractors (NFRC), which represents 70% of the roofing industry and has more than 1,200 members, is calling on the government to introduce harsher penalties for late payment to ensure businesses are paid promptly to avoid losses in the event of contractor insolvencies.
“Late payments put firms at risk of never being paid and there are numerous NFRC members who experienced heavy losses when ISG collapsed,” said the trade association’s group chief executive, James Talman.
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“The lack of accountability and consequences for late payment is exploited by some companies at the expense of those smaller businesses they subcontract to, and it is harming the sector’s productivity.”
One NFRC member told the trade body “we were taken for granted”, while another claimed “[ISG] knew there were issues and, as usual, we were led along”.
Another member said: “ISG were awarded substantial contracts by the government framework for public sector contracting. How has the supply chain been let down so badly?”
ISG owes the supply chain hundreds of millions of pounds. However, the failed contractor’s administrators said they don’t expect “there will be any funds available” to pay the debts owed to subcontractors.
Beyond the Fair Payment Code
The NFRC’s latest survey on the roofing industry found that 45% of its members experienced delays getting paid in the third quarter of 2024.
During that period, 39% of respondents reported not getting paid within 45 days of a job’s completion – 10 percentage points higher than the previous quarter.
The trade body said the figures showed “a worrying trend” of members not getting paid within 45 days steadily increasing since the survey began in 2020.
To reverse this trend, the NFCR wants the government to go beyond the new duties on large companies to report on their payment practices, and the Fair Payment Code introduced earlier this month, which gives awards to companies that pay their supply chain promptly.
“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,” Talman said.
“At the very least, there must be safeguards in place to ensure government work is awarded to stable businesses who pay their suppliers and subcontractors on time.”
Talman added: “It is imperative that the Procurement Act 2023, due to be implemented next year, considers payment practices and departments act on the data.”
The Act, which will come into force on 24 February 2025, aims to make public procurement simpler and more flexible.
“Poor payment practices continue to unfairly strain the finances of roofing and cladding businesses during a period of record insolvencies within construction,” said Talman.
“The cash flow management challenges the construction sector is subject to do not have to be so crippling.”
