Kier will cut the use of its supply chain finance by 50 per cent over the next year, the groups’s management has announced.
The firm, which on Thursday announced it made a £245m pre-tax loss in the year to 30 June 2019, revealed the move which coincided with what it said is a big reduction in its payment times.
Finance director Bev Dew said: “The group is targeting the reduction of its utilisation of its supply chain finance facility by around 50 per cent in the coming year.
“This has now commenced and will be accelerated by the disposal of the residential business, which was a £35m allocation of the overall £195m facility.”
Mr Dew added the company had only utilised £170m of the available facility during the last year, down from £185m in 2018.
Under the Kier Early Payment Scheme, suppliers can choose to draw down payment of invoices, which typically have terms of around 60 days for construction suppliers, in 21 days. Suppliers pay a fee to the bank that administers the scheme to access their money early.
Kier has reduced its average days to pay suppliers over the past year partly thanks to the £250m cash injection it received from its rights issue last December, Mr Dew said.
Suppliers to Kier Limited are now paid in 32 days on average compared to 43 days in June 2018.
National Federation of Builders (NFB) chief executive Richard Beresford said the company still had problems when it comes to paying suppliers, however.
“Despite Kier paying more of their invoices within 30 days, their last report to government shows they are getting worse at paying within agreed terms,” he said.
The proportion of invoices paid but not to terms increased to 69 per cent by the end of June this year, up from 63 per cent in June last year.
Earlier this year the firm floated a plan to charge large suppliers a fee to work for them which was branded “an insult” by the NFB.
The contractor had been considering charging subcontractors a percentage of the revenue they receive on packages of work, but the idea was later dropped.
Mr Dew is due to leave the firm shortly, after his departure was announced in May.
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