New research commissioned by application for payment specialist Payapps reveals that contractors face severe reputational and commercial damage due to outdated payment practices.
This concerning revelation comes from a poll of over 100 (127) UK subcontractors and is just one of the many, concerning findings within the recently published ‘Construction applications for payment: Pain point or competitive advantage?’ report.
Getting to the heart of this thorny issue, the report also highlights how persistent late payments and cumbersome processes are not only an admin headache for subcontractors, but also a strategic liability for contractors, who risk losing access to supply chain talent.
Taking a closer look at the data…
A reputational reckoning
Subcontractor word-of-mouth is shown to be a key deciding factor when it boils down to whether or not they work with a specific contractor, and negative comments can have a serious effect.
The research shows an overwhelming majority (84%) of subcontractors consider a contractor’s payment reputation before deciding to bid or price future jobs.
Moreover, nearly seven in ten (68%) admit to pricing in the risk of slow or unreliable payments by increasing their rates, effectively charging poor payers a ‘friction tax’ on projects.
Priced out and potentially blacklisted
The report goes on to show that, for contractors relying on trusted supply chains to deliver complex projects on time, the consequences of poor payment are becoming critical. Almost a third (29%) of subcontractors have already walked away from doing business with contractors whose payment application process proved too complex or difficult in the past.
Surprisingly, four in ten (42%) would actually turn down future work altogether with a contractor who is consistently behind payments. When almost double (79%) are paid late and 73% are in regular disputes over pay, the risk of contractors blacklisting themselves from top talent is very real.
Confidence built on consistency
Payapps found subcontractors are seeking transparency, fairness, and standardised systems. Over eight in ten respondents (85%) agree that a clear, consistent payment system builds their confidence in a contractor, proving that good payment practices have become a powerful tool to secure subcontractor capacity and loyalty.
With over two decades of proven expertise working with the construction industry, Anthony Puma from Payapps comments on the report findings: “This report makes it crystal -clear that subcontractors cannot afford to absorb the costs and delays caused by inconsistent payment applications and recurring disputes. They’re struggling to keep in control and whether it’s by adding risk margins or walking away from projects entirely, nobody wins.
He continues, “Contractors need to realise that their payment process is directly attached to their market reputation. Standardising and digitising the application for payment process has become about so much more than saving admin hours. Those who understand will remain or become a contractor of choice and have the preferred supply chain needed to stay competitive.”
For additional actionable insights, download the ‘Construction applications for payment: Pain point or competitive advantage?’ report.
