Trade contractors call on government to ensure prompt payment
By Carey Fredericks
Dec. 10, 2013 – Today, the National Trade Contractors Coalition of Canada (NTCCC) called on the Federal Government to help ensure the success of small businesses by enacting prompt payment provisions through regulatory change. As a first step, they suggest making a simple addition to the standard federal government contract.
Dec. 10, 2013 – Today, the National Trade Contractors Coalition of
Canada (NTCCC) called on the Federal Government to help ensure the
success of small businesses by enacting prompt payment provisions
through regulatory change. As a first step, they suggest making a simple
addition to the standard federal government contract.
During the normal course of business, trade contractors carry a substantial amount of upfront costs to carry on a particular job. This includes equipment, materials, employee salaries, and maintaining necessary insurance, amongst any number of other variables. These costs are substantial, even if they are expected.
To a certain extent, all businesses are forced to carry some costs while they wait for payment for goods delivered or services performed. In most industries, payment is received when goods or services are delivered or along some other predictable schedule. In the construction industry, however, it is a loosely tolerated, but very impracticable and a costly practice when there are no strict timelines for payment for services rendered.
Late payment is a serious impediment to small business, making already trying economic situations even more difficult, and in most cases, forcing companies to lay off workers or go out of business altogether. As an industry which employs collectively over 250,000 employees, the ability to pay workers is paramount to Canada's economic success.
"The solution to this problem, in our opinion, is prompt payment legislation in provincial and territorial jurisdictions and prompt payment provisions through regulatory change at the federal government level," said Brad Diggens, NTCCC Chairman. "Federally, we see a simple addition to the standard federal government contract to extend the existing payment provisions from the crown to the general contractor to include those interested parties throughout the construction chain."
An absence of a regulatory framework means that the collection of late payments is a difficult and expensive task for trade contractors. The small businesses simply do not have the resources, financial or otherwise, to consistently have to seek payment. Nor should they have to.
"During these economic times, government leadership is needed now more than ever," concluded Diggens. "Simply put, late payments hurt small businesses and hurts competitiveness. Prompt payment provisions involving all parties to contract will provide everyone with the tools to ensure that their businesses remain competitive and productive, and will also encourage a culture of prompt payment that is presently absent and is much needed."