Trade suppliers in the construction sector face unique challenges when it comes to getting paid. Long payment terms, retention clauses, and complex project structures can all delay payment — sometimes indefinitely.
The Trade Supplier Dilemma
As a trade supplier, you've delivered materials or equipment to a construction site in good faith. You've incurred costs to purchase stock, pay staff, and maintain your fleet. When payment doesn't arrive on time, your entire business is put under pressure. Yet you may be reluctant to take aggressive action against a contractor you want to keep as a customer.
Know Your Contract
The first step in any debt recovery situation is to review your contract and terms of business. What payment terms were agreed? Is there a retention clause? What does your contract say about late payment interest? Having clear, well-drafted terms can make recovery significantly easier.
Understand Your Legal Position
Under the Late Payment of Commercial Debts (Interest) Act 1998, you are entitled to claim interest and compensation on overdue commercial debts. This applies automatically — you don't need a specific clause in your contract. Many trade suppliers don't realise they can claim these statutory entitlements, which can add up to a significant amount on large overdue invoices.
Protect Your Cash Flow
While you're waiting for payment, protect your own cash flow. Review your credit limits with all customers and consider whether you should continue supplying a contractor who has a poor payment record. It may be better to lose a slow-paying customer than to supply more materials and increase your exposure.
When to Involve a Collection Agency
If your internal chasing hasn't produced results after 30-60 days, it's time to consider professional help. A good debt collection agency will handle the recovery professionally, protecting your commercial relationship while pursuing the debt firmly. At Hays Collections, we understand the construction supply chain and work to recover your debts without burning bridges.
Prevention Strategies
Going forward, implement stronger credit control procedures. Consider requiring proforma invoices for new customers, reducing credit terms for high-risk accounts, and running credit checks before extending significant credit. The cost of prevention is always lower than the cost of recovery.
For expert debt collection support for trade suppliers, speak to Hays Collections today.
