NFRC Roofing Industry Survey Shows Poor Payment Practices Worsening

THE LATEST State of the Roofing Industry survey from the National Federation of Roofing Contractors (NFRC) reveals 45% of respondents experienced delays getting paid in Q3 2024.

The proportion of those not paid within 45 days of a job’s completion rose to 39% in Q3, up from 29% in Q2. This follows a worrying trend that has seen the proportion of NFRC members not paid within 45 days steadily increase since the survey began in 2020.

Overall, construction experienced more insolvencies in the year to September than any other sector, at 4,264, according to BCIS (The Building Cost Information Service). While this is a 0.7% decrease from the insolvencies to September 2023, construction insolvencies remain 32.5% above pre-pandemic levels.

Poor Payment Practices Worsening

James Talman, NFRC CEO

“Poor payment practices continue to unfairly strain the finances of roofing and cladding businesses during a period of record insolvencies within construction,” says NFRC Group CEO James Talman.

“Late payments put firms at risk of never being paid and there are numerous NFRC members who experienced heavy losses when ISG collapsed.

“The lack of accountability and consequences for late payment is exploited by some companies at the expense of those smaller businesses they subcontract to, and it is harming the sector’s productivity.”

NFRC members who were owed money when ISG collapsed said the following:

“We were taken for granted.”

“They knew there were issues and, as usual, we were led along.”

“ISG were awarded substantial contracts by the government framework for public sector contracting (schools and academies etc). How has the supply chain been let down so badly?”

James adds, “The cash flow management challenges the construction sector is subject to do not have to be so crippling.”

“At the very least, there must be safeguards in place to ensure government work is awarded to stable businesses who pay their suppliers and subcontractors on time.”

NFRC says it was encouraged by the launch of the new Fair Payment Code and its improvements on the Prompt Payment Code.

However, James comments, “The government will have to go much further than a voluntary code and badges to combat endemic late payments that unfairly benefit those who exploit agreed terms.”

NFRC says it will closely monitor the total amount of payments which are not made within a payment period and the percentage of invoices that are not paid within a period due to a dispute. This data will be included within new payment reporting requirements in 2025. Poor performance in these areas must have a direct impact on who is awarded government contracts.

“It is imperative that the Procurement Act 2023 due to be implemented next year considers payment practices and departments act on the data,” says James.

NFRC Roofing Industry Survey

Overall, the survey shows an uptick in workload for NFRC members following the general economic slowdown during the change of government.

A balance of 29% of respondents reported overall growth in workload in Q3 of 2024. NFRC awaits further details of the government’s growth plans, particularly the 2025 spring spending review, and hopes that a stable future helps to address the disproportionate insolvencies happening across the sector.

The report surveyed NFRC members’ activity during the three months to September 2024 and results from over 130 businesses were gathered between 22 October 2024 and 13 November 2024.

Read the full NFRC State of the Roofing Industry report here.

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