There could be a new snag in the race to 5G. The issue of payment terms being dragged out to those who perform network upgrades and tower work is getting worse, say many members of the National Association of Tower Erectors (NATE).
NATE Executive Director Todd Schlekeway told Inside Towers in an interview yesterday, that many of its member companies that build, deploy and maintain both macro tower and small cell sites are being asked to wait longer to be paid. Without naming specific offenders, he said the issue includes “certain major companies operating at different levels of the wireless ecosystem chain.” NATE has 840 members; approximately over half are small business contractors.
In years past, payment terms were 30 days, then that stretched to 45 and 60 days. Now, it may be 90 to 120 days before the contractor is paid. And contractors are being told payment terms are non-negotiable. “It is misguided” that these major industry customers are asking that small business contractor firms “essentially be their bankers,” Schlekeway says.
Owning and operating a contractor company in the communications tower and wireless infrastructure industry, “is not the same as being a lender and asking for interest on the delayed payment.” It’s a cash flow issue, Schlekeway tells Inside Towers. Slowed cash flow has major effects on the entire operation and the ability to take on more work and deploy/install more sites, according to the NATE executive.
Typically a contractor purchases materials to start a job; when that job is done and the “closeout package” is completed, which includes photo or video documentation that the scope of work was completed as specified in the contract, then the contractor invoices the company that hired them. That’s when the payment clock begins, according to Schlekeway.
“This is a significant issue. It’s one of the most pressing issues affecting the companies who have boots on the ground. We have to address it collectively as an industry,” says Schlekeway, otherwise, this has the potential to “significantly hamstring” 5G network deployment in the U.S.
NATE has been discussing the issue internally. The organization plans to hold what he characterizes as “higher level diplomatic conversations” with the appropriate member companies in an effort to discuss the problem collaboratively. NATE is also likely to discuss the issue with legislative and regulatory stakeholders as well. The goal is to “try and walk these payment terms back to equitable and reasonable levels,” says Schlekeway, “for the benefit of the entire industry.”
by Leslie Stimson, Inside Towers Washington Bureau Chief
July 25, 2018