In 2023 more than a fifth of invoices sent to oil firms were paid late, continuing a “master-slave relationship” between operators and supply chain, according to unions.
Despite figures improving compared to the previous year, 22% of invoices sent to operators in 2023 were paid after 30 days.
As a result, unions have claimed operators are continuing “a master-slave relationship” as firms squeeze “smaller contractors that have a tight cashflow.”
UK regulator, the North Sea Transition Authority (NSTA), shared that 78% of the roughly 430,000 invoices received in 2023 were paid within 30 days.
In 2022, this figure stood at 75% of 477,000 invoices.
Unite the Union regional officer John Boland told Energy Voice: “This has been an ongoing problem for years.
“Operators delay payments as long as they can, and it does make difficulties – particularly for smaller contractors that have a tight cashflow.
“Unfortunately, most of them are reluctant to raise the issue as they fear it will affect them getting new work, thus it stops them developing new projects, and, in turn, slows down work in the whole industry.”
© Supplied by Kami Thomson/DC ThomTrade body Offshore Energies UK drew attention to this issue recently when its chief executive David Whitehouse opened the organisation’s Share Fair event in Aberdeen.
David Whitehouse told attendees: “At a very basic level, we must make sure we pay our bills on time.”
Boland added: “I know some work has been done by OEUK to try and improve the situation and working relationships between operators and contractor companies, but it is still very much a master-slave relationship.”
‘Delayed payments have a knock-on effect further down the supply chain’
In response to the latest figures, OEUK supply chain manager Graham Rafferty said: “Prompt payment is fundamental to sustaining healthy cash flow throughout the supply chain, and essential to small to medium enterprises (SMEs) looking to grow their business.
“OEUK’s Supply Chain Principles state that organisations buying goods and services should strive towards supporting 30-day payment terms and we regularly assess progress to identify ways to drive further improvements.”
The NSTA has the remit to track operators, but not other firms doing business with the UK supply chain.
© Supplied by OEUKAn NSTA spokesperson commented on the most recent statistics: “While we are encouraged that the proportion of invoices paid within 30 days has increased again, the overall total is down.
“As such, we will continue to press operators to support their suppliers by making payments quickly.
“Delayed payments have a knock-on effect further down the supply chain – creating uncertainty and slowing down investment in equipment and skills by service companies.”
In 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.
Since then, the percentage of delayed payments has dropped year-on-year.
Rafferty added: “Sharing good practice is an effective way to achieve this and the Procure to Pay guidelines we developed with our members support consistency in managing payment processes and help ensure on-time payment to suppliers.”
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