Nationwide, $46 billion in construction invoices remained unpaid beyond a 30-day period, an amount representing approximately 16 per cent of the estimated $285 billion in annual construction activity in Canada.

Worse yet, between 2007 and 2012, the average duration of receivables increased by more than 13 per cent, rising from 62.8 days to 71.1 days.

These were just two of the statistics that the 84 construction leaders who gathered at VRCA for a pair of meetings learned about the prospect of prompt payment legislation in BC. The sessions were organized by Prompt Payment BC, a coalition of construction trade associations and trade contractors working to convince the provincial government to legislate a solution to payment delays in the construction sector.

Timely cash flow throughout the construction payment chain is fundamental to a healthy construction industry. Delay in payment anywhere in the supply chain reduces profit, restricts innovation and investment in plant, machinery and people. It also increases the cost to finance company operations and drives up the cost of construction overall. 

Delayed compensation throughout the construction payment chain increases risk and chokes economic growth. The impact of payment delays on small and medium-sized enterprises can be disproportionately severe, and even a minor delay in payment of one or two invoices can put smaller businesses under severe financial stress. 

The United Kingdom, Ireland, Australia, New Zealand, and the U.S. have enacted some form of prompt payment legislation. Last December, Ontario became the first Canadian province to pass legislation to address payment delays after reforming its Construction Lien Act.

Earlier this year, the federal government announced its intention to consult, draft, and pass legislation that would guarantee prompt payment and an adjudication system for federal government-owned projects.

Already, federally-sponsored prompt payment consultations heard from contractors, subcontractors and suppliers who believe they are not adequately protected from payment delays and litigation to secure payment is too protracted and costly.

Construction in BC is a $16-billion-dollar industry and employs more than 225,000 men and women, making it the largest employer in BC’s good sector.

Learn more about Prompt Payment BC here. You can join Prompt Payment’s letter writing campaign by clicking here.

Prompt Payment BC is also surveying firms to further identify the scope of the issue in BC. Complete the survey here.

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