News | Published March 11 2020

Roof-Link sentiment pertinent as BAE and Bombardier are investigated for late payments

The issue of mistreatment of smaller firms by large contractors has come under the microscope once again recently, after Britain’s largest defence contractor and a train manufacturing giant were both investigated for late payments.

Two divisions of BAE Systems have been suspended from the government supported prompt payment code, which promotes the fair treatment of suppliers, after it failed to honour a commitment to pay 95 per cent of invoices within 60 days.

BAE Systems is the largest arms manufacturer in the UK and one of the biggest government contractors.

The national chairman of the Federation of Small Businesses, Mike Cherry, called the decision to suspend BAE an “important statement”.

Cherry added: “Taking decisive and public action against those businesses that are found to be bullying suppliers or consistently paying late is the only way we can affect the cultural change needed.”

Bombardier, meanwhile, has come under criticism from Philip King, the government’s small business commissioner, over similar mistreatment of suppliers.

King said: "Bombardier Transportation UK Ltd claim to have robust procurement and payment systems in place, but those systems proved to be ineffective on this occasion.

"Bombardier Transportation UK Ltd mandatory payment practice reporting indicates that they pay 61 per cent of their suppliers outside of payment term, with an average time of 116 days to settle an invoice.

"This data highlights Bombardier need to take accountability and make significant changes to their internal processes to ensure their small business supply chain is paid on time."

It is not the first time that government contractors have come into the firing line, after the issue of late payments by larger firms had been highlighted by Michael Hockley and Martin Lloyd, joint-managing directors of Roof-Link Industrial and Commercial Ltd.

Roof-Link, an industrial and commercial roofing and cladding provider from Waltham Abbey, Essex, is all too familiar with large contractors making payments late.

Writing in The Parliamentary Review about these issues, Hockley and Lloyd said: "Late payment by some main contractors is a constant problem affecting the cashflow and stability of many small companies such as us. We would welcome government legislation to regulate this, which would undoubtedly increase employment and productivity.

"From our very first day, our aim has been to dispel the industry’s ingrained image and establish our reputation for care and responsibility.”

According to the Times report on the BAE sanction, Roof-Link's hopes may be realised since the government is now weighing-up the prospect of implementing tougher sanctions against late payers, such as fines, and threatening to ban them from government contracts.

Hockley, Lloyd and a number of other small business leaders will undoubtedly be taking note in future to gauge what action the government does decide to take and whether it does indeed have the desired effect, which will help ease the concerns of smaller businesses being mistreated.

Authored by

Scott Challinor
Business Editor
March 11 2020

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