The Chartered Institute of Building (CIOB) has said it supports a hard cap on the time allowed for invoices to be paid or disputed to end poor payment practices in the industry.
In its response to the government consultation on late payments, CIOB also backed “financial consequences” for those who ignore the rules, as well as mandatory reporting requirements for companies to be transparent over invoice payments.
The government ran a public consultation between July and October on proposed legislative measures to tackle late business-to-business payments.
In the 12 months to August 2025, almost 4,000 construction companies in England and Wales became insolvent, roughly 76 a week and the most of any industry.
In many cases, a significant factor for these collapses would have been cashflow problems caused by clients and firms higher up the supply chain not paying invoices on time.
Strain on supplier relationships
CIOB said it heard from many small and medium-sized construction companies that experienced issues with late payments, but were reluctant to chase hard for the money owed or to speak up publicly for fear of being overlooked for future contracts.
Speaking to the CIOB, Stephen King, director at Rail Asset Development, a small company with only four employees specialising in construction projects close to railways, said his invoices were often paid late by his clients.
“When I chased a payment in October for work we carried out in March of this year, I was told it would be April 2026 before the client receives planning consent for their project and that’s when they will release the funds to pay me,” King said, who has to draw on reserve funds to cover day-to-day costs like salaries, resulting in interest penalties.
“That will be over a year since we provided the service and is totally unacceptable, especially when we’re such a small firm.”
Paul Hayman, CEO of MA Group, a Buckinghamshire-based company specialising in property claims handling, said that around half of the invoices his team issues are paid later than their agreed 30-day terms and on occasions they have been kept waiting for up to 240 days, eight times longer than contractually agreed.
Hayman said: “When we are paid late, it directly affects cashflow, creates strain on supplier relationships, and increases our administrative overheads, all of which undermine the professionalism and effort of our teams and add pressure to maintain morale. It’s such a common issue yet still so frustrating and disheartening.”
‘New legislation doesn’t go far enough’
Miruna Leitoiu, policy and public affairs officer for CIOB, said that unless payment practices are reformed to ensure transparency and fairness for businesses of all sizes, “it is inevitable more construction companies will fold”.
“The industry is vital in delivering the 1.5 million new homes and significant infrastructure projects the government has committed to, as well as providing a livelihood for millions of people, so the rate of insolvencies we continue to see is extremely worrying on many levels,” said Leitoiu.
“Relatively new legislation requiring large companies to include payment performance in their annual reports, a new Small Business Commissioner and the Fair Payment Code, which allows companies to volunteer to pay suppliers in a timely manner, are all good initiatives, but they haven’t gone far enough.
“The Small Business Commissioner has limited resources and is also limited when it comes to the construction sector, and we hear from some of our members that the Fair Payment Code has had minimal impact for them personally, so we hope that following its consultation, the government acts to bring about much-needed change.”
