Dunn & Bradstreet have released their first quarter analysis of payment trends for the first quarter of 2017 and reported that where small businesses within the construction sector were late in paying invoices to large suppliers, the average period of late payment was only 14 days.
In comparison, the larger construction companies were late in paying smaller subcontractors or suppliers on average around 20 days.
According to Contractors Debt Recovery managing director Anthony Igra, there is currently a power dynamic whereby large construction companies pay their smaller suppliers and subcontractors late because they are able to do so with impunity and no penalty.
To counter this, Igra says that we need a late payment code or legislation, which would penalise companies late paying companies.
"There have been stories of large contractors placing money owed to smaller suppliers on the short-term money market in order to make a return before paying the money out," Igra said.
"Large companies have the luxury of referring the contractor to the accounts department and that is where the contractor remains for months.
"The account person blames the project manager, and the project manager refers back to accounts, which in my view is deliberate and a planned strategy.
"It's a pure reflection of the power dynamic - they pay late because they can, and at no risk and at no cost."
Across all industries, 40.2% of Australian businesses are late to pay their bills, with average late payment times for those who did pay late standing at 15.3 days.
Overall, the report states that construction was the sixth highest industry in terms of late payment times by sector.
Construction came in behind mining, utilities, manufacturing, retail trade, and wholesale trade.