The Public Contracts Regulations 2015 requires governments main contractors to pay their contractors within 30 days of receipt of invoice and to ensure this provision is passed down the supply chain.
Yet in the Carillion case they were not paying subcontractors for over 120 days. So Carillion were in breach of their contracts. Why was this not picked up? I am sorry to say, checking details of contracts is boring and thus people do not deal with it. We all find more exciting tasks to do.
Delayed payments should have acted as a red flag to senior civil servants with responsibility for Carillion contracts. Yet it was not, why? Quite often it is because they have not automated such tasks so they are relying upon humans to tell them and they find checking boring so don’t do it. Wouldn’t it be nice to have a dashboard telling you which things were problems in real time?
The process some Government Departments have followed seems to raise questions. How, if credit reports from the likes of Dunn & Bradstreet / Experian etc. had been done on Carillion, could any contracts have been awarded to Carillion? Such reports would have shown their average payment terms were non-compliant.
Carillion is dead and undergoing a post mortem. The results are unlikely to help its stakeholders. What other companies might be open similar practices? How might they may be affecting your business?
There is a lot to learn from Carillion not least to check compliance and process, with the terms and conditions of your contract, on a regular basis. However, we are humans and that is no fun. So let Wrekin help you by reviewing your existing systems to suggest ways in which you can automate your process. We will work with what you have got to make your organisation more efficient thus making time to benefit faster.
The IACCM says on average companies destroy about 9.2% of the value of a contract through poor process. Sorting this out will be your quickest improvement to your bottom line and we have seen returns on investments in excess of 1000%. Boring but profitable!