More than £195 million of retentions is overdue for release and over £54 million of retentions has had to be written off by specialist contractors, according to the results of new research from the National Specialist Contractors Council (NSCC) and Federation of Master Builders (FMB).

The NSCC Payment Survey, carried out in partnership with FMB, shows that tier 2 subcontractors are the net providers of trade credit within the construction industry, offering more trade credit to tier 1 contractors and clients than they receive from their own suppliers.

The abuse of retentions remains a significant problem. At present, an estimated total of £439 million is withheld in retentions from all NSCC and FMB members, 45 per cent of which are overdue and 12.5 per cent of which are written off as bad debts.

The report, Credit Where Credit Isn’t Due, featured responses from 719 businesses with a collective turnover of £2.3 billion and revealed that 92 per cent of NSCC and FMB members agree contractual payment terms with their clients of 45 days or less, but only 57 per cent of members actually receive payment within those terms. This shows that, although contractual payment terms are improving, late payment is still rife within the supply chain and more needs to be done to ensure payments are made within terms.

When it comes to their own supply chains, NSCC and FMB members pay within terms much more regularly, with 89 per cent agreeing contractual payment terms of 45 days or less and 84 per cent actually paying within those terms.

NSCC president Kevin Louch said: “We are still facing the all too familiar issue of late payment. If we are to successfully address this and other longstanding issues within our industry, there needs to be a major shift in how we operate. Throughout the supply chain we need to be on the same level, talking the same language, and then we can make this industry work for all of us.”