Revealed: One in six entrepreneurs do not publish payment data
More than a sixth of large construction companies do not publish data on their payment terms, Construction News can reveal.
Although the law since 2017 requires most large companies to publish information on the average payment time of their suppliers, an analysis of CN found that 17 of the 100 largest sub-contractors in terms of turnover had either not fulfilled their obligations for more than two years or had never published the information.
Amid the confusion over reporting criteria, only one of these 17 is clearly outside regulatory thresholds.
After being presented with CN, two deputies criticized the system and called for change.
The obligation to report on payment terms, for companies in all industries, was introduced as part of a declared offer to increase control over payment performance of large companies and provide small companies with better payment performance. information so they can make informed decisions and challenge late payments.
The Department of Business, Energy and Industrial Strategy (BEIS) reporting requirements mean that if a company meets two out of three criteria for two years, it is legally required to publish data on its average payment terms for all. every six months.
The criteria are:
- Turnover over £ 36 million;
- More than 250 employees;
- Balance sheet total greater than £ 18million.
The term “balance sheet total” is not widely used in accounting circles and CN understands that some entrepreneurs have interpreted the term to mean “net assets”. However, it actually refers to all assets with no provision for any liabilities.
CN contacted BEIS on several occasions for clarification on this matter, but the ministry declined to state unequivocally that those who interpreted the total as net assets were incorrect.
A spokesperson simply said, “The guidelines say that the balance sheet total is the aggregate of amounts shown as assets on the company’s balance sheet. The balance sheet total is the total of fixed and current assets and is aligned with the definition of medium-sized enterprises set out in the Companies Act.
“It would appear that with the impact of the COVID pandemic this has been overlooked and I am happy to confirm that it has now been updated”
The response sparked further confusion given that the government’s website for searching for published payment data reports is titled “Check When Big Businesses Pay Their Suppliers.”
When asked why it hasn’t released its payment deadlines, one entrepreneur – RG Group – said it hasn’t met the reporting thresholds, adding, “We’re a mid-sized company.
A spokesperson for the Office of the Small Business Commissioner, an independent branch of government that is not responsible for reporting on payments, confirmed that “the companies law defines’ balance sheet total ‘as’ the total of amounts shown as assets in the company’s sheet ‘balance. This is its total assets before offsetting any liabilities.
Delays in accounting systems
Of the 17 companies that did not report, three admitted that they should have done so but, as of November 3, they had not.
Tolent, which generated £ 185million in its last fiscal year, hasn’t released any report since March 2019, when it provided figures for the second half of 2018.
A spokesperson said: “I think we have submitted these reports already, but more recently due to some changes in accounting systems and key personnel it has fallen behind schedule.
“We will be submitting updated reports at the end of this year.”
Higgins Group had not published its performance reports for any six-month period since July 31, 2019. After being contacted by CN, a spokesperson said: “It would appear that with the impact of the COVID pandemic this has been overlooked and I am happy to confirm that it has now been updated.”
Glasgow-based City Building had not released any report from the one covering the six months to March 31, 2019. A spokesperson said: “During the recent lockdown restrictions, we have changed our reporting system account to allow the team to work safely from home. This has caused delays, which we are currently working on. The firm has since released its reports for the last four relevant periods.
Not simple enough
Three other companies that appear to fall within the scope of the regulation – RG Group, Readie and Mount Anvil – each responded to CNby stating that they believe they are exempt from the reporting requirements.
A spokeswoman for Mount Anvil said her exemption was due to “various intergroup transactions.” When asked if the reporting requirements were straightforward to understand, she added, “In our team’s experience, there are other guidelines for other regulations and compliance requirements that have more specific criteria, and [are] therefore easier to interpret.
“The government should be working to make things easier, not harder for small businesses, but their current system is confusing and allows late payers to get by.”
Seema Malhotra, Labor Party shadow minister for small business
Henry Construction, TSL, Caddick Construction, HG Construction, Spie UK, Tide Construction, Permasteelisa, Gilbert-Ash, Renaker Build and Michael J Lonsdale all appear to be required to report based on their published accounts, but none have responded. requests to comment, or declined to comment on why they hadn’t.
Glencar, which has grown rapidly and only recently met the criteria, has yet to report.
The BEIS spokesperson did not respond to whether the government had ever taken legal action against a company for failure to report, but instead asked CN to tell him which companies had not reported – information available on his own website. In 2019, CN revealed that the ministry did not have dedicated staff to develop or assess reports.
Seema Malhotra, Labor Party shadow minister for small business, said: “Tackling the injustice of late payments is important for the survival and growth of small businesses, and it is right that small businesses have the right to do so. right to know the practices of the companies they work with.
“The government should be working to make things easier, not harder for small businesses, but their current system is confusing and allows late payers to get by. It is essential that ministers take action, immediately review the effectiveness of the reporting system and do everything possible to ensure prompt payment. “
Liberal Democrat business spokesperson Sarah Olney said: “Government advice is completely opaque – which means businesses just don’t know what is needed, and the construction industry suffers.
“The Liberal Democrats want the government to issue proper advice and enforce meaningful regulations, rather than cluttering businesses with rules that cannot be followed.”
The BEIS spokesperson said: “The comprehensive government guidelines make it clear which businesses are covered by the regulations and how certain types of payments are to be reported. A dedicated government mailbox is also available for businesses requiring additional reporting assistance.
“As with all regulations, it is up to businesses to determine whether they should report late payments and they should comply if they are required to do so.”
The ministry recently opened a consultation on whether its reporting system is meeting its goals of making the payments system more transparent. He was required to open the consultation within five years of the entry into force of the legislation. The investigation, which questions whether the rules should stay in place, ends on February 4.
A spokesperson for the Office of the Small Business Commissioner urged people to report concerns about companies’ non-compliance with the law to [email protected].gov.uk.
Analysis of the company’s accounts by David Price. CN Payment 100 data collection completed until November 3 by Ian Weinfass, David Price, Tiya Thomas-Alexander and Joshua Stein.
- A full list of the Top 100 Contractors by revenue and their published payment terms will be published online on Construction News on Monday.