According to The Specialist Engineering Contractors (SEC) Group Scotland Public bodies are withholding £120m of outstanding invoices owed to private construction firms in Scotland.
The main reason cash is being held back is to improve the public bodies’ working capital according to SEC, who warned that withholding this money is putting some smaller firms at risk of insolvency.
Public sector in Scotland
Around £4bn is spent annually in Scotland by the public sector and SEC says it’s members deliver nearly 40 per cent of this work. Primary contractors are usually paid within 30 days, but the SEC says little effort is made to ensure that secondary or sub-contractors are treated in the same way.
Managing Director of SEC member Select, Newell McGuiness, said that: “It suggests that while organisations which depend on money from the public purse would appear on the surface to be backing moves against late payment, the reality is somewhat different. The Scottish government has wholeheartedly endorsed industry’s appeals to help small firms by the simple expedient of prompt payment. It now needs to enforce that across the bodies for whose funding it is responsible.”
Committed to make sure companies are paid on time
A spokeswoman for the Scottish Government said the Government was “committed to ensuring that procurement guidelines on pay are adhered to and that companies are paid on time, because we understand how important this is to the financial future of smaller firms.”
The spokeswoman also confirmed that: “The Scottish government has been co-ordinating trials of Project Bank Accounts (PBAs), which are ring-fenced accounts that payments can be made directly and simultaneously by a client to contractors and sub-contractors, improving cash flow through the supply chain.”
She continued: “We are absolutely committed to ensuring every pound spent on infrastructure investment goes as far as possible to support businesses and jobs, building greater resilience into the broader Scottish economy.”
If your company is struggling with cashflow issues, particularly if these cashflow issues are caused by outstanding invoices, contact Invoice Finance specialist Bibby Financial Services to find out if we can help.
BIBBY FINANCIAL SERVICES
As the UK’s leading independent invoice finance specialist and a trusted provider of cashflow funding to over 7,000 businesses, Bibby Financial Services provides a range of finance solutions for companies in over 300 industry sectors.
For more information about Bibby Financial Services’ cashflow solutions, visit: www.bibbyfinancialservices.com or call 0800 91 95 92.