Contractors anxious for law on late payments
NOT GIVING UP Charlene Prpich, centre left, and Tom Prpich, centre right, were among those at the Sturdy Stone Building on 3rd Avenue N on Tuesday protesting the province’s decision to eliminate the hearing aid plan, which provided hearing tests, hearing
The provincial government could introduce legislation aimed at protecting contractors and tradespeople from delinquent project owners within a year, according to the head of the association representing 1,300 Saskatchewan-based construction companies.
Saskatchewan Construction Association (SCA) president Mark Cooper said he is “confident” a landmark bill making its way through the Ontario legislature will spur other provinces to crack down on the industry’s decadesold late payment problem.
“It doesn’t really matter to me whether we’re first or not, as long as we get it in,” Cooper said, referring to Bill 142, which passed its first reading late last month and would force owners to pay contractors within 28 days of receiving an invoice.
If passed, Bill 142 would provide contractors with an additional week, for a total of 35 days, to pay subcontractors.
That represents a considerable improvement over the national average of 71.5 days between invoice and payment. The SCA has said previously that the first 60 days without payment costs the typical construction business about 20 per cent of its margin.
Cooper, who has long advocated for more stringent rules, said he expects little political resistance to a proposal from the SCA and other industry groups that argues for strict time limits and give unpaid contractors the ability to charge interest and suspend work.
The proposal — which Cooper said enjoys broad industry support — also calls for owners to show evidence of their ability to finance a project, third-party trusts to hold funds and the establishment of a fast and efficient dispute resolution process.
“What this is really driving at is bringing balance back to the power imbalance that exists in contractual arrangements today. It will benefit everybody (because) no contractor has leverage in a deal when they ’re looking for work, especially in an economy like this.”
Late payments have become increasing common as the provincial economy flounders, rising to 40 per cent of invoices from about 15 per cent five years ago, according to Trevor Stein, who owns the Saskatoon-based contractor Stein Electric Ltd.
“It’s getting worse every day,” Stein said, adding that the sums in question are enormous — almost $1 million in one case.
The effects of late payment are significant. Because contractors are responsible for buying materials, a lack of steady cash flow can hinder their ability to take on new projects, and make capital investment in new equipment extremely challenging, he said.
Mid-West Group of Companies president and CEO Ken Achs said it’s clear that “accounts payable are abused by a lot of people.” While some have argued that more restrictive rules would dampen investment in construction projects, he takes a different view.
“I think it’ll get rid of the people who don’t have the money to develop,” Achs said, adding that any new legislation in Saskatchewan should have “teeth” to prevent developers from refusing to pay and forcing contractors into long and costly court battles.
Cathedral Stone and Tile Works Ltd. co-owner Brent Robinson, who learned last week that his firm will not see any of the almost $9,000 it is owed by a developer after a lien is “discharged,” agreed that late payment is becoming a “much bigger” problem.
While “it would be wonderful if everybody just paid their bills,” there’s little evidence to suggest prompt payment legislation would do anything except protect companies that have little protection under the current system, Robinson said.
“If (Premier) Brad Wall wasn’t supportive of (this legislation), I would be absolutely stunned.”