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Four in 10 invoices throughout the building and construction sector in Australia are paid late, a new survey suggests.

In its latest analysis of late payments in Australia, debt ratings agency Dunn & Bradstreet said that throughout the second quarter of this year, only around 60 per cent of invoices with the building and construction sector were paid either on or before the due date.

This made the building sector the fourth-worst out of 15 sectors included in the survey.

Only mining, manufacturing and wholesale were worse performing sectors for on-time payments.

Whilst late payment times within the sector have improved by 1.8 days over the past year, the results nevertheless highlight the degree of cash flow difficulties faced by builders and subcontractors.

Around Australia, serious concerns about the ability of subcontractors and trade contractors to obtain prompt payment for their services have been raised after the Senate Inquiry Into Non-Conforming Building Products concluded that there was a ‘culture of non-payment’ which permeated the construction chain.

That inquiry recommended a number of changes, including that the Federal Government adopt a national and uniform security of payment regime and that project bank accounts (PBAs) be introduced to prevent head contractors from using money owed to subcontractors on projects for their own working capital purposes.

Thus far, however, government responses have been mixed.

At a federal level, the government has yet to take definitive action but is undertaking a review of state-based security of payment legislation to determine what represented ‘best practice.’

Whilst the full report is not expected until the end of the year, a draft report due out shortly may give some hint as to what, if anything, might be done.

At the state level, meanwhile, Queensland has moved to introduce PBAs amongst a raft of other changes in what it refers to as ‘fairness’ legislation.

These, however, apply only to ‘building’ contracts and do not assist subcontractors within the civil construction sector in any way.

Across all sectors of the economy, around 64 per cent of invoices were paid on time, with average late payment time frames sitting at 14.6 per cent and almost one in 10 companies paying in excess of 60 days beyond terms.

Shamefully, large companies are by far the worst payers.

Whereas almost 34 per cent of non-ASX listed companies pay their invoices on time, the figure among companies which are listed on the ASX 200 is a shocking 12.6 per cent – or one in eight invoices paid on time.

 
  • Thanks Andrew. As you pointed out, this culture of non-payment has been confirmed for decades and most recently by the Senate Inquiry. It is now entrenched, and just like the lack of consumer protection it is enshrined in law. In reality, in both cases we have the practice of 'legalized fraud' under the guise of civil and administrative law – and therefore what is in fact criminal is not only permitted but enabled and encourage. So much for the concept of a 'fair go'! Rather it's a case of the 'Fair Go Long Gone'!

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