ActuateUK, the engineering services alliance, has praised the introduction of cash retentions reporting legislation
ActuateUK, an alliance of engineering services, has welcomed the introduction of a cash retentions reporting legislation.
The secondary legislation comes following changes to payment reporting in regulations coming into effect next year.
Poor cashflow is a big issue in the engineering sector
Poor cashflow due to late payments and holding of retentions is a big issue for engineering service companies, with the construction sector suffering the most reported insolvencies as a result.
Last month, the Department of Business and Trade confirmed through research that late payment is passed down through the supply chain, meaning that these issues have a particular effect on SMEs.
ActuateUK has previously called for tightening of legislation to ensure more prompt payments to allow for fining of those who are caught repeatedly paying late.
There will now be a government consultation on the updated retentions reporting legislation
Rob Driscoll, ECA director of legal & business at Actuate UK, said: “This is a monumental step forward on the road to reform of cash-retentions. We already know from our work with Government designing the payment reporting requirements that transparency moves culture and spotlights bad behavior, as well as providing the metrics required to exclude poor performers from public sector procurement.
“In the wake of a 53% rise in insolvencies since 2020 and the seismic impact of the collapse of ISG that will be felt over the coming months, lifting the lid on the truth of cash-retentions is critical to Government’s objectives of improving fairness and unlocking growth for SMEs.”
Debbie Petford, BESA’s director of legal and commercial affairs and member of the Actuate UK Business Group, said: “Reporting on retentions as part of the payment reporting requirements is a welcome step. Given recent events in the construction sector, with the Phase 2 Grenfell Inquiry Report laid bare and the collapse of ISG, the business environment that specialist contactors face is critical to their survival. We see the headlines, but the ramifications are felt far down the supply chains, putting more pressure on smaller companies.
“Late payments must remain at the top of the Government agenda to address the necessary culture change.”
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