Contractors in the building services sector suffer from long payment periods dictated by their clients. Subcontractors are required to pay for up to 60 days: this violates the Payment Terms Act, which generally only allows a payment period of 30 days, unless a longer period has been explicitly and legally agreed. The reform of the Payment Terms Act must be put on the government's agenda.
According to the Entrepreneur Gallup (Finnish Entrepreneurs 10.5.2025), SMEs in construction and industry in particular suffer from extended payment periods from their business partners. Almost 60% of respondents say that the Payment Terms Act has not been complied with.
“In a recent decision by the Market Court, the court prohibited the client, under threat of a fine, from using a payment term of more than 30 days in subcontract agreements. The Market Court has stated that a payment term can be unreasonable, even if it has been expressly agreed upon, if the term does not have an objectively assessed basis. Using a subcontractor as a financier for its contractual partner is not such a case,” says the CEO. Mika Hokkanen LVI-Technical Contractors from LVI-TU ry states.
The Payment Terms Act must be reformed without delay.
Unreasonable payment times drive many building services contractors into serious cash flow problems, make it difficult to manage finances and investments, and in the worst case, can lead to bankruptcy.
"Applying for external financing is not uncommon when a stronger contractual partner uses their negotiating power to their advantage. Holding a subcontractor as the customer's bank by extending payment periods is clearly illegal and unethical," says Mika Hokkanen.
The Payment Terms Act must be reformed so that it secures the position of SMEs as creditors in relation to large companies. This change is particularly needed in situations where the customer's turnover exceeds the contractor's turnover by many times.
"The problem is so widespread that the reasonableness of payment terms cannot be left to individual legal cases. A change in the law, clear and binding rules of the game, and concrete sanctions for violating them are needed," Hokkanen emphasizes.
Time to deliver on our responsibility promises
Fair cooperation, compliance with the law and agreements are the cornerstones of responsible business. A business practice where a company knowingly breaks the rules and uses smaller partners as a financial buffer will eventually erode its reputation.
"Corporate social responsibility is an increasingly important factor in competitiveness. Companies that operate fairly and responsibly attract high-quality partners and a skilled workforce," says Hokkanen.
