It’s Not Just the Late Payments Breaking Small Contractors’ Backs

UPDATE Inside Towers is learning more about the issue of late payments from all levels of the towerco, carrier and wireless infrastructure industry, affecting smaller contractors asked to do tower wok for projects such like 5G, FirstNet and the broadcast repack. Smaller companies say their profit and cash flow are being squeezed in other ways, too.

A contractor in the upper Midwest told Inside Towers carriers and larger contractors “are outsourcing more of what they used to do internally” to smaller vendors. A different contractor based in the Midwest says his company, too, must procure source materials through select vendors for a pre-determined price.  That refers to our story last week: “NATE Members Log In About the Late Payment Issue.”  He told Inside Towers: “Most of these vendors do not have enough parts in stock and it is extremely costly. We used to use other vendors which gave us favorable terms and they would have it in stock.”

Those hiring smaller contractors to do the work still pay for major materials, like antennas, radio heads and ground base stations. 

However, smaller contractors now need to purchase site-specific minor materials for a job, such as cabling, connectors, tower mounts, plus insure and warehouse the materials. “They have found a way to take the profit out of the job and transfer liability to you,” this individual told us in an interview.

In the past, when a job was complete, they were asked to dump the surplus gear, he said. Now, smaller contractors have to catalog it, package it, call the truck line and ship it back to the company that hired them. “I added a staff guy to do this,” he said. If the surplus gear is not returned, “we’re responsible for it and they’ll bill you,” he says.

Many industries that use construction workers now use a third–party to certify firms as vendors. His company supplied safety, financial and other types of records to the third-party, who then rated his company, he said. “Our vetting bill was $4,500 this year. We never used to have to pay for that.”

Contract management for accounts receivable is being outsourced, too. “They charge us a fee for everything we bill. Maybe we can start incorporating that into our bid,” he said, adding it’s one more way smaller contractors are being nickel and dimed.

Adding up all the new costs, on top of the payment terms lag, “is the straw that’s breaking the camel’s back. They’re asking us to do all of that” as well as “wait 90 days for payment.”

This contractor says he wants to go back to 30-day payment terms. “They need us. I’m not going to be happy with 60.”

By Leslie Stimson, Inside Towers Washington Bureau Chief

August 7, 2018       

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