CLC warns industry to stop payment abuse and contractual threats

The Construction Leadership Council (CLC), which is acting as a pivot between government and the construction sector, has warned firms to think carefully about how they deal with the supply chain. The CLC said the way some firms are acting relating to payment abuse and contractual threats is unacceptable.

The CLC is increasingly concerned about the management of payment in the supply chain, and the risk that clients and firms will seek to invoke contractual clauses to the detriment of other firms.

In a statement from the CLC Coronavirus Taskforce, signed by  Andy Mitchell  Chief Executive, Tideway, and Chair of the CLC, said that it is increasingly concerned about the management of payment in the supply chain, and the risk that clients and firms will seek to invoke contractual clauses to the detriment of other firms.

The CLC has said that all construction businesses should continue to pay in accordance with agreed contractual terms. Similarly, firms should not be threatening to invoke penalty or other contractual clauses, when it should be the priority of all clients and firms to sustain the industry.

Mr Mitchell wrote: “Our actions at this time will be remembered. All firms should think hard about how their reputation could be damaged by not doing the right thing.

“It has come to our attention that there are number of businesses that have chosen to unilaterally delay payment or extend credit terms. We do not believe this is acceptable or appropriate – particularly at this time of great stress.”

Many organisations have taken steps to support their supply chains through their collaborative administration of contracts. Government has also led the way encouraging  public-sector clients to continue to pay suppliers at risk due to Covid19.

Mr Mitchell concluded: “We owe it to our sector and the country to take all steps necessary to ensure that the industry is in good health to support the recovery, when it comes.

It is everyone’s responsibility to keep money moving in the sector and vital that all businesses play their part by maintaining payment and by managing contracts responsibly.”