SME pay squeeze shows pressure

ECA, BESA, late payments, SMEs
Rob Driscoll

Small business owners and their employees are facing reduced or late salary payments because of late payment practises from buyers, according to a survey from the ECA and BESA.

The survey, which was also supported by 25 other construction industry organisations, found that 92% of businesses have payment issues with 65% paid late frequently or very frequently.

The research uncovered the fact that 37% of SME owners had reduced their own salaries; 23% cancelled training; and 36% had problems paying taxes due to payment issues. Perhaps most concerning is that 7% of employers were forced to pay their own staff late.

ECA director of Legal and Business, Rob Driscoll, highlights the impact of late payment: “This ground-breaking data shows the truly devastating effects late payment has on the lives of business owners, their staff, their children, and their wellbeing. With a lack of fair payment directly causing widespread mental health issues, abusive payment practices fundamentally remove the capacity for individuals to feel purpose or value in a sector which enables £540bn GDP within the wider UK economy.”

BESA director of Legal and Commercial Services, Debbie Petford, believes action needs to be taken: “These figures are a timely reminder that unfair payment practices place significant and unnecessary burdens on owners of construction SMEs and their employees. Urgent reform is required to prevent companies inappropriately using retentions money owed to smaller businesses down the supply chain to prop up their cash flow.”

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