Wouldn’t utopia be that simple chain of events where you received an order, you carried out the work, you sent your invoice, your invoice was paid in full and your invoice was paid on time?
For any door and window installer the advantages of being paid on time are self evident. Getting paid on time is not just about that. When we are paid on time it means we can focus on what we are good at and not wasting time chasing money that is due to us.
Late payments is an issue for all businesses.
In 2014, a survey by the National Specialist Contractors Council (NSCC) has revealed that over £200m of late payments and retentions were written off as bad debts by subcontractors.
At some point or another most window and door installers have done their work and then had the frustration of waiting to get paid. In the construction industry especially, the use of subcontractors is widespread and none more so than window, cladding and curtain walling installations.
Small double glazing firms suffer from late payments.
For window and door installers, this can mean working with some large organisations. These can include the major construction firms, directly for local authorities or working directly for schools.
Every business is affected in different ways by late payments. For a small businesses or one man band, attention is diverted away from getting work done because it is the business owner that has to chase his money.
For some people chasing their money can only be done out of normal office hours. The business owner has been working on site all day. He can only do his admin evenings and weekends. He will find his suppliers closed and can often only resort to out of hours email communication because he can’t get to speak to anyone. Emails get ignored.
A larger business may have a member of staff responsible for accounts or an accounts department. Is it reasonable to assume that your member of staff in accounts won’t be as focused on chasing money that is owed? Getting someone else to chase your money can be a challenge. After all it’s not their own money their chasing, it’s yours.
But let us face facts. SOME OF US ARE SIMPLY NOT THAT GOOD AT CHASING MONEY. We don’t like to do it, many don’t possess the communication skills to do so and it’s simple human nature that some people are simply too embarrassed to broach this issue.
Why are subcontractors paid late?
One of the biggest annoyances for subcontractors is that you are chasing money from your customer that often is a cash rich, long established and successful business.
Why does this company that clearly has the means to pay you not doing so?
Your contractual obligations.
Contractual obligations may also be in place that can affect your ability to get paid.
For domestic installations this is the homeowner building a new new home or extension. Often this will be a simple retail window contract signed in the home.
You will find contracts where the window company has put in their terms and conditions what it considers fair contract terms to prevent the end user from withholding money unfairly. With the best will in the world these terms rarely make the homeowner intent on not paying you do so any quicker.
In commercial contracting it is far more complicated and there is far more paperwork involved. There is often an agreed programme, a schedule of works, completion dates and handover periods. There is also the necessity to work with other trades on site.
At times the main contractor, site supervisor or Quantity Surveyor can blame the subcontractor for site delays.
Some subcontractors may terminate their contract because of late payments. On the one hand you may feel justified in terminating your contact or refusing to carry out any further work because you’ve not been paid. On the other you could find yourself in litigation for breach of contract.
In commercial contracting it is hugely important you keep your communication in writing at all times. And there is much more you can do.
- Be aware of your contractual obligations from the starBefore you commit, check with your own suppliers first.
- Don’t make promises you can’t keep.
- If other trades are holding you up record the facts of this and put in writing.
- Keep written or photographic records of your own works.
- If you can’t complete on time immediately apply in writing for an extension with reasons why.
For many door and window installers, losses can be incurred due to late payments. Apart from losing productivity, some larger late payments can affect staff wages being paid, suppliers are paid late and the prolongation process can drag on. Other than accurate record keeping, the correct submission of notices and a good paper trail, the average small business has little other option.
The Prompt Payment Code (PPC)
The Prompt Payment code is a business led initiative on behalf of the Department for Business Innovation and Skills. Businesses that have signed up to the PPC should pay their suppliers on time, give clear guidance to their suppliers of how their invoices are paid and encourage good working practices in the payment of their subcontractors.
In the construction sector there are many well known construction companies that many will have worked for who have signed up.
There are nearly 2000 companies signed up to the PPC across a variety of sectors. However for companies that are related to glass and glazing, doors or windows, aluminium, pvcu and so forth the fenestration sector still has a way to go. There are only six companies listed. These are:
- Rooflad Profiles Ltd
- Minshull Windows Ltd
- GEZE UK Ltd
- ERW Joinery Ltd
- Enhanced Glazing Systems Ltd
- Birmingham Glass Services Ltd
Being signed up to a code, a member of a professional organisation or a trade body is one thing, but does it mean anything if that cheque still hasn’t arrived?
The reality of being a window installer.
Every business relies on a healthy order book to succeed and survive. A door and window installer will often have to work under different circumstances to high street retail businesses or those in the service sector.
We create case studies, upload images to our websites and create our brochures. These are all intended to highlight the prestigious work we have done for big corporations, high street names and impressive clients. All this is done in the hope we can demonstrate our skills and expertise and secure more work. We have a desire to work for big companies or secure large contracts knowing that it will be good for business, brings us kudos and enhances our image.
Yet often, it is the large companies that are the worst for paying subcontractors on time. Do they do this because they’re inefficient or are they simply big enough to ‘bully’ the subcontractor? Do they even care that they’re not paying you on time?
The construction and fenestration press will at times report when a certain long established window company has ceased trading. Dig deeper and you’ll find bad debts often contributed to their downfall. It’s simply not fair.
Even substantial and long established firms such as Glamalco with a turnover of £18 million can fall victim to cashflow problems.
And would a small window installer working for a powerhouse name in construction even consider legal action for late payments even to ensure the survival of their business? In many cases no.
However we also have to consider the many issues of working in the fenestration sector.
Often it is the supply chain that lets everyone down.
Doors and windows rely heavily on outside suppliers. So many suppliers involved such as extrusions, manufacturing, finishing and installation of a window. Often when these suppliers let us down the knock on effect falls down to the installer.
Is it realistic to impose contra charges on our own suppliers because they have let us down? They may have delivered late because their systems company did not deliver a complete order, powder coated bars arrived damaged, glass arrived incorrect or the wrong size.
To contra-charge your supplier does not bode well for a good relationship. All of these are real world problems for anyone manufacturing or installing windows and doors. But your own customer does not care about your supply problems. They want their doors and windows installed when you promised they would be. And if they don’t get them on time, many see this as an opportunity to ask for a reduction or pay their outstanding balances late.
The People Issue
There is a also a valid case that it is people and human nature that are responsible for late payments to subcontractors.
Quantity Surveyors are often regarded as arrogant and squeezing every last contra charge or discount out of the subcontractor.
Or how about the company that is the first to put you on stop if your account is one day late? Yet that same company is a notorious late payer themselves.
People that work in accounts departments are known anecdotally for ignoring phone calls, rarely responding to emails and being a source of frustration generally. They may well work for a window company but they actually know nothing about windows or what it means to be a subcontractor!
Many of us today email invoices. But if that company changes staff or changes an email address the subcontractor is often not advised. They continue to email who they believe is the correct recipient. What happens to your invoice if it is not delivered to the correct inbox? And can you trust your customer to forward it on?
Therefore, the very procedures some businesses have in place for the payment of an invoice can make it hard for a subcontractor to get paid. Business is about good relationships, good ethics and good working practices.
Despite the efforts of governments, associations and institutions to ensure we are paid on time, ultimately it is a people issue. The window industry publications, websites and ezines rarely tend to approach these real issues for manufacturers and installers.
Let’s question the way we do business with each other.
Whilst reporting market trends, who has installed what new product and other ‘feel good’ news is fine rarely do these publications or news bring to our attention real issues that affect not just window installers but businesses generally.
We are all too quick to criticise the big national window company that we believe uses dodgy sales tactics. We are the first to question why our local competitor sells a product for the price that they do. Perhaps it is time to start questioning how we do business with each other.
Nobody sets up in business to fail. A multi million pound aluminium or PVCu systems company may feel mild pain at being hit with a bad debt but it can ride it through. But a small to medium sized business can fail simply because it wasn’t paid.