More than 100,000 invoices issued to UK operators in 2022 took more than 30 days to be paid, according to the North Sea Transition Authority (NSTA).
The figures, the latest available, show 477,000 invoices were received in 2022, with 25% paid late, compared to 475,000 the prior year when 29% took more than a month.
A spokesperson said for the NSTA, which is currently gathering 2023 data, said “there is still plenty of room for improvement” and will continue to press “lagging operators”.
Unions slammed the figures as “shocking and astonishing in equal measure”.
It follows disappointing results from 2021, then NSTA chief executive Andy Samuel said that the regulator was “happy” to step in and look through the data in the most “egregious” of late payments.
‘Operators still choose to ignore the guidelines and abuse their power’
Unite the Union’s regional officer, John Boland told Energy Voice that inconsistent payment times has been an “ongoing issue” and can impact continuity of employment for those working for smaller supply chain firms.
He said: “This has a major impact on supply chain companies, particularly smaller companies, and slows down any new projects.
“The knock-on effect to this, is a lack of continuity of employment for the workforce, and we have a continuous cycle of redundancies and rehiring, which is detrimental to both employers and the workforce.”
Mr Bolland was not the only Union representative to voice concern, with RMT’s national secretary, Darren Procter, describing the news as “shocking and astonishing in equal measure!”
Mr Procter continued: “This industry appears unable to learn from the errors of their past and their actions put the sustainability of our supply chain at risk.”
The RMT national secretary claimed that operators were abusing their power by “putting many contractors at risk.”
He explained: “Since the early 1990’s the issue of payment delays have dogged the sector, in fact, it was as a consequence of operator actions that the ‘supply chain principles’ were established in the early 90’s and subsequent versions have been rolled out since over the 30 years since they were first established.
“Despite this, the operators still choose to ignore the guidelines and abuse their power, putting many contractors at risk.”
Mr Procter called for energy operators to “get their houses in order” in an effort to support the UK’s domestic supply chain.
‘There is still plenty of room for improvement’
The UK regulator told Energy Voice that 477,000 invoices were received in 2022, compared to the 475,000 issued to operators in 2021.
The year previous 29% of invoices sent to operators were paid late, this figure has since dropped, and the UK regulator is gathering data for 2023 while working on its UKCS Stewardship Survey.
The NSTA issued a warning to the industry following the disappointing figures displayed in its 2021 findings and there’s been some increase in payments being made on time. However, a spokesperson said: “There is still plenty of room for improvement.”
Following disappointing results from 2021, then NSTA chief executive Andy Samuel said that the regulator was “happy” to step in and look through the data in the most “egregious” of late payments.
An NSTA spokesperson said: “The increase in the number of invoices paid within 30 days in 2022 is encouraging. However, there is still plenty of room for improvement and the NSTA will continue to press lagging operators to support their suppliers by making payments quickly.”
Prompt payments are necessary for smaller supply chain firms as inconstant cashflows can impact their ability to pay bills and staff wages.
Keeping Supply Chain Principles up to date
Trade body Offshore Energies UK’s supply chain manager Graeme Rafferty explained that: “Prompt payment is crucial to sustaining healthy cash flow throughout the supply chain, particularly for SMEs.”
Mr Rafferty explained the trade body’s Supply Chain Principles outline that purchasing organisations should strive towards supporting 30-day payment terms.
He added: “We regularly assess industry’s payment performance, and our 2022 biennial Working as One survey revealed that many supply chain businesses face pressures with extended payment terms and the late payment of invoices, and we’ll be assessing progress in this area when we publish the 2024 survey results later this year.
“Working with members, OEUK has developed Procure to Pay good practice guidance to support companies in achieving consistency in managing payment processes and ensure on-time payment to suppliers, and we’ll be publishing these imminently.”
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