Payment terms improved in the construction industry in 2021 but obstacles persist

Payment terms are improving, but they still have room for improvement. In its report on the 2021 financial year published last April, the Altares group already estimated that the building and public works sector had raised the bar. A nuanced finding a few months later by the latest edition of the Observatory of VSEs (very small businesses, with 0 to 9 employees), published by the specialist in means of payment American Express in partnership with the BVA polling institute.

At the end of June, it is the turn of the Ministry of the Economy to come to the same conclusions. Bercy has in fact just received the report of the Observatory of payment terms, which confirms that the phenomenon is tending to “normalize” after experiencing a peak due to the Covid crisis. That said, late payments have still not returned to pre-pandemic levels.

In addition, the current geopolitical, economic and energy context does not help: “Professional organizations attest to a relative relaxation of late payments in 2021 but also to payment terms which remain high due to supply problems and price increases for materials and raw materials”says the ministry.

According to figures from Altares, companies in all sectors of activity were faced with an average of 12.4 days of late payment at the end of 2021, one day more than in 2019. According to the Banque de France this times, the payment terms observed in 2020 stabilized around 43 days of turnover for customers, and 49.4 days of purchases for suppliers. “However, the health crisis and its economic consequences have not been neutral: the drop in lead times initiated in previous years has been interrupted.“, notes Bercy.

Disaster recovery is a priority

With regard to construction, the statistics of BTP Banque indicate “a structural difference in the building, of a little less than 15 days, between the item of customer payment deadlines and that of suppliers”. The difference in question had stagnated between 2016 and 2019 before rising again in 2020, which could be explained by the fact that “Given a very large cash flow fed by PGEs (loans guaranteed by the State), and in a context of complicated organization of worksites, a large number of companies were fully mobilized on the activity during the takeover, leaving their customers’ receivables to run a little”.

Data from the Banque de France show that supplier lead times fell slightly by 1.2 days in the construction sector in 2020, while customer lead times increased by 0.7 days. “As a trend, since 2012, construction companies have also made major efforts to reduce their supplier payment times, approaching those noted for the economy as a whole, while their customer times remained stable overall and much higher, by just under 20 days, than those observed in all sectors combined”can we read in the report of the observatory.

“Target” more the “bad payers”

According to opinion polls by INSEE (Institute of Statistics and Economic Studies), construction business leaders even considered that customer payment times had dropped in 2021, for all sizes of business. businesses and all types of customers. Levels of opinion that had not been reached for a long time (2019 for companies with more than 10 employees and 2007 for craftsmen), a sign of relative confidence “in a context of cash already strongly mobilized by the surge in the price of materials, observed since the beginning of 2021 and which will continue at least until the summer of 2022”.

Another study carried out by the Banque de France on behalf of the Capeb (Confederation of crafts and small construction companies) nevertheless notes that the payment times for suppliers were on average 48 days of purchases including tax for small construction companies in 2020, when customer payment terms were on average 64 days of turnover including VAT.

The smallest structures would therefore still be largely exposed to the phenomenon even though they themselves show proof of reactivity, which logically leads them to demand more firmness towards companies showing delays. Capeb a fortiori asks the DGCCRF (General Directorate for Competition, Consumer Affairs and Fraud Prevention) to carry out more “targeted” towards “bad payers”.

Finally, the public works sector posted a further increase in its payment terms and customer terms, all principals combined and which include hidden deadlines, to 90.5 days in 2020, compared to 86.4 days in 2019. On average, average supplier lead times amounted to 80.8 production days in 2020 compared to 77.5 days in 2019. “The subject of concern of the FNTP (National Federation of Public Works) remains the effective deadlines for the settlement of public contracts”notes the report.

Major companies singled out

In general, the Covid would only have made it worse “structural abnormalities” which observers have long highlighted, and more particularly the attitude of large companies, considered “very worrying” : since 2019, their average supplier payment time has been constantly increasing, and only 41% of them pay on time.

A figure to be compared to the 75% of SMEs (small and medium-sized enterprises) who honor their invoices on time. If these behaviors ceased, the benefits reaped would be dizzying: “Indicatively, in the absence of delays, SMEs would recover 12 billion euros in cash and ETIs (mid-sized companies) 4 billion euros, of which 9 billion euros owed by large companies and 7 billion euros by other economic agents (public sector, foreign, etc.)”underlines the ministry.

At the head of the Observatory of payment terms, Jeanne-Marie Prost judges “essential that large companies correct these dysfunctions which are detrimental to the solidity of our economic fabric”. Regularly, the professional organizations of the construction industry also demand more solidarity between the different sizes of actors, especially in the uncertain economic situation that we are currently experiencing.

The DGCCRF ensures for its part to continue to maintain the pressure. Last year, almost 1,300 establishments were checked by him, and the anomaly rate rose to 32%, a slight increase compared to 2020. “The administrative penalty procedures represented a total of approximately 40.7 million euros in fines. The finding that emerges from these checks is that the companies penalized are most often for breaches of the ceilings applicable to payment deadlines and failures in terms of accounting organization”completes Bercy.

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