NFRC Calls for Industry Leadership on Payment Practices

The NFRC expresses concern over reports in the media and from our Members that major merchant Travis Perkins are extending their standard payment terms to 60 days from the end of the invoice month, a move that undermines progress the construction industry has made in improving payment practices.

“Construction continues to have the highest insolvencies of any UK sector, an alarming figure which is in large part driven by long payment terms,” said NFRC Director of Membership Richard Miller.

“Extending payment terms shifts financial risk through the supply chain and creates additional strain for smaller suppliers and contractors who are already facing tight margins,” added Miller.

Government has set a clear expectation by capping its own standard terms in public procurement at 30 days and also through the Fair Payment Code, which grants gold awards to businesses that pay at least 95% of invoices within 30 days. NFRC feels that responsible companies in the private sector should follow this example, supporting healthy cash flow throughout the supply chain rather than holding onto payment to boost their own liquidity.

NFRC Members recently raised concerns about long payment terms in response to the Government’s Late Payments: Tackling Poor Payment Practices consultation, warning that some businesses may use the maximum 60-day term as a default rather than a ceiling, especially if cash flow tightens when other payment loopholes are closed.

For this reason, NFRC has called on Government to reduce the statutory maximum payment term to 45 days, with the ambition of reducing to a 30-day maximum within five years.