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  • Writer's picturePekaj Group Pty Ltd.

Should We Name and Shame Companies Who Do Not Honour Their Payment Obligations?

Updated: Jan 20

As a contractor operating in the construction industry in Australia, you might have encountered a few clients who failed to pay for your completed services. This is a widespread issue faced by many in the industry and can negatively affect the financial stability of your business. But the question remains, should we publicly name and shame these companies who do not honour their payment obligations?

The Master Builders Association (MBAV) recently conducted a study revealing that the average payment time for construction projects in Australia is 33 days. Unfortunately, 14% of contractors are forced to wait more than 60 days to receive payment. This highlights the severity of the payment delay issue in the industry. Late payments not only affect a contractor's cash flow but also puts pressure on their ability to pay suppliers, staff, and other contractors.

One approach to addressing this issue is to publicly name and shame companies who don't pay for completed services. This strategy has been embraced by a number of organisations in the construction industry to bring attention to the problem and prompt companies to pay promptly. The aim is to create a public record of these companies and inform other contractors about their payment practices. This allows contractors to make informed decisions about who they choose to work with and avoid doing business with unreliable clients. For example, in 2018, the Australian Subcontractors Alliance launched the ‘Name and Shame’ campaign, publicly naming companies with a history of not paying subcontractors for completed work.

However, there are also arguments against naming and shaming companies in the construction industry. Some fear that this approach could lead to legal battles, as companies may take offence and claim that their reputation has been damaged. Furthermore, naming and shaming may not always result in payment, and could lead to further disputes or payment delays. For example, in 2019, a contractor in Victoria was sued by a developer for naming and shaming them in a public forum for failing to pay for completed services. The case was eventually settled out of court, but it highlights the legal risks associated with officially naming and shaming companies.

In conclusion, there is no one solution to the problem of late payment in the construction industry in Australia. While naming and shaming companies who don't pay for services rendered may have some advantages, it also has the potential to cause further problems. It is up to each contractor to determine whether this approach is appropriate for them. If you are considering naming and shaming, it is important to seek legal advice and understand the potential consequences before taking any action.


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