黑洞社区

MPs reiterated their criticism of Carillion鈥檚 controversial 120-day payment scheme this week despite research, produced by the contractor, showing subcontractors regard the system as good for business.

Carillion launched its 120-day payment scheme in March this year, prompting a barrage of criticism from industry experts and MPs who attacked its complexity and said it flew in the face of efforts to improve payment terms for SMEs in the supply chain.

The so-called reverse factoring system allows subcontractors to be paid earlier in return for a small charge, although Carillion has stated that no subcontractor would be financially worse off under the system.

Last month, Carillion announced it was expanding the system and produced research showing that 89% of suppliers using the system felt it has had a positive effect on their ability to get paid promptly and flexibly. The firm said the figures showed critics were 鈥渁bsolutely wrong鈥� about the scheme.

However, this week MPs restated their opposition to the scheme.

Labour MP Debbie Abrahams, who as chair of the all-party inquiry into late payment campaigns on payment issues, said: 鈥淏ig businesses should stick to their pre-agreed payment terms, pay their suppliers on time and ensure that the same applies all the way down their supply chain.鈥�

鈥淲ith supply chain financing it鈥檚 the SMEs, again, who bear the financial brunt of the arrangement.鈥�

Fellow Labour MP Alex Cunningham, said the results of Carillion鈥檚 survey made 鈥渋nteresting reading鈥�, but 鈥渃ould never be considered independent鈥�. 鈥淲hilst the firm鈥檚 report is positive, I don鈥檛 think they can really claim outstanding success when less than 5% of their 5000 contractors were involved,鈥� he said.

鈥淚 also wonder who the contractors were - perhaps large organisations with the capacity to exist in that kind of business environment?

鈥淚 doubt very much it will be the small businesses at the end of the supply line who can cope with involves being paid months after work has been completed.鈥�

Conservative MP Robin Walker said he remained convinced it was 鈥渂etter for businesses to pay as promptly as possible鈥�: 鈥淓specially where small suppliers are involved鈥� I don鈥檛 think it is helpful for bigger businesses to extend their payment terms.鈥�

A spokesperson for Carillion said they would be 鈥減leased to discuss鈥� the system with anyone who felt it disadvantaged subcontractors because it did not 鈥渄isadvantage them in any way鈥�.

Meanwhile, it has emerged that ISG, Galliford Try and Willmott Dixon, along with Balfour Beatty, are also investigating introducing similar systems.

A spokesperson for Galliford Try said the firm was conducting an 鈥渙ngoing review鈥� of its payment system. 鈥淎s part of that review a supply chain finance initiative is being actively considered,鈥� he said.

黑洞社区 understands Willmott Dixon is looking to trial a early payment finance initiative this autumn, ahead of rolling out a wider programme in the future.

A Willmott Dixon spokesperson said: 鈥淐ash flow is the life blood of any company and it鈥檚 important to Willmott Dixon that we pay our supply chain within a decent timescale for their work in helping us deliver our projects.鈥�

ISG鈥檚 chief executive said the firm , but this would not involve extending its payment terms.