UK’s Integrity Software blog: Taking on the challenging prompt payment issue

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integrity softwareDavid Richards nominated the U.K. based Integrity Software blog with these observations:

I first discovered the blog through a Linkedin group and have since been following. As I am active member of the construction forum world, I was accepted as the first guest poster on the blog, which was a great honour. This gave me the boost I needed to start writing regularly for the construction industry and since I have also blogged on the UK Construction Blog. The Integrity Software blog is a great source of info and tackles issues fairly and with a construction angle, rather than just trying to sell their product. I think this shows their commitment to the industry and their respect for it and those in it.”

These are worthy observations. The software company’s blog, indeed, goes far beyond product promotional messages.  It tackles challenging industry issues, including one that is universal to all markets — the challenge of achieving reliable and prompt payment for invoices through the construction supply chain.

In some recent postings, the blog reports on a trend in the U.K. for “early payment schemes,” where the sub-contractor or supplier receives funds in a timely manner in exchange for what is described as a modest financing fee. (In Canada and the U.S., this process is described as factoring, and is often a sign that the business paying the fees to receive the funds lacks sufficient operating capital.)

The blog doesn’t avoid the controversy associated with these prompt payment schemes, but handles the issue in a sensitive and factual manner. For example, it quotes from an article by Professor Rudy Klein describing these initiatives “as a cancer within the industry.”

In an article for Building.co.uk, professor Klein condemned early payment schemes as both an ‘industry disease’ and ‘a cancer within the industry.’ Professor Klein’s outspoken criticism is only the latest in a long line of attacks on early payment schemes, which many believe are unfair to subcontractors and potentially hinder growth.

In the words of a review into early payment schemes by the Scottish government, ‘a scheme which requires subcontractors to pay a financing fee to access funds they should be receiving anyway is fundamentally fair.’ Many others share these sentiments, while Professor Klein argues that early payment schemes actually help to cement the culture of late payments within supply chain financing which has been part of the industry for years.

However, 2014 promises to ring change for the construction industry. As noted by professor Klein, impending legislation and government measures will help to mandate and control 30-day payment periods, providing subcontractors and suppliers with an opportunity to recover from the threat of non-payment.

Obviously, a blog that isn’t afraid to report on sensitive and challenging issues is worthy of your bookmark. The content will be especially relevant to UK readers, but prompt payment issues — and legislative initiatives to solve the problem of slow payment within the industry — are certainly relevant as well in North America.

Nominations for the 2014 Best Construction Blog close on Friday, January 31. You can submit your nomination here until then. Voting commences on February 1 and continues through March 31.

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