Helping construction firms meet tougher payment rules

With the government using its immense buying power to turn the screw on late payers in construction, there has never been a better time for contractors to invest in this area. Since 1 April, all bidders for public-sector contracts above £5m have to show they pay 95 per cent of invoices within 60 days. For those achieving 90-95 per cent, a clear plan to improve must accompany their bid, while bidders running below 90 per cent are disqualified altogether.

Following last year’s changes to the Prompt Payment Code, which mean signatories must pay 95 per cent of firms with fewer than 50 employees within 30 days, the need to pay on time is ever clearer.

So why do contractors still find themselves wasting time and energy sorting out unpaid bills from frustrated suppliers?

“I think it comes down to a fear of change,” says Rebecca Sperti, sales director, supply chain solutions at Causeway Technologies. “We see organisations making incremental improvements, but not addressing the underlying cause of their inefficient processes.”

She adds: “They try to avoid impacting their supply chain, so they limit themselves to adopting PDF attachments or scanning paper invoices they receive, but that doesn’t solve the problem. Our analysis shows that 10 per cent of all invoices are rejected simply because they don’t contain the information that’s needed – that’s tens of millions of invoices being manually checked and returned to the supplier across the construction industry every year.”

Sperti says technology can help suppliers and their clients achieve their shared goal of seamless, timely payment. Causeway’s Tradex platform can be used by contractors to receive, validate and match invoices to purchase orders and ‘goods received’ notes, and automatically trigger payment.

“Only 25 per cent of the top 250 contractors have adopted electronic invoicing capable of automating the invoice process for them. The key is in early validation of the content of the invoice that’s been received,” she explains.

“If an invoice submitted via Causeway Tradex lacks any of the information needed, it will be pushed back to the supplier for correction within seconds. This kind of automated intervention not only saves administrative time and cost at both ends; it speeds up the process of getting the bill paid and – crucially – improves trust and understanding.”

Causeway Tradex was created specifically for the construction industry, taking account of its quirks, and it has clocked up three decades of use. It already boasts a community of some 75,000 construction-related suppliers, with more joining all the time. Many routinely ask new clients to use it.

Construction suppliers can log into the free Causeway Tradex portal to submit invoices and see the status of an invoice, creating more transparency and aiding stronger relationships, which ultimately pays dividends on site.

Sperti says that when new main contractors come on board they typically find 70 per cent of their supply chain are already using Causeway Tradex to invoice other contractors. “It means it is actually often more disruptive not to adopt this technology,” she adds.

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