Fair payment is still a major issue in the construction industry, according to the Federation of Master Builders (FMB).

Tier 2 sub-contractors are the net providers of trade credit within the construction industry, offering more trade credit to tier 1 contractors and clients than they receive from their own suppliers, according to new research.

The research was conducted by the FMB and the National Specialist Contractors Council (NSCC).

Brian Berry, Chief Executive of the FMB, said: "Our report – 'Credit where credit isn't due' - features responses from more than 700 firms with a collective turnover of £2.3 billion. It reveals that more than 90% of FMB and NSCC members agree contractual payment terms with their clients of 45 days or fewer but only 57% of members actually receive payment within those terms. This clearly shows that, although contractual payment terms are improving, late payment is still rife within the supply chain and much more needs to be done to ensure payments are made within terms.

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"When it comes to their own supply chains, FMB and NSCC members pay within terms much more regularly, with 89% agreeing contractual payment terms of 45 days or less and 84% actually paying within those terms. The abuse of retentions remains a significant problem. At present, an estimated total of almost £440 million is withheld in retentions from all FMB and NSCC members, 45% of which are overdue and 12.5% of which are written off as bad debts."

(CD)