Year-End & Cash Flow

Britain’s small construction firms wait almost two-months for payment

Fred Heritage | 25 October 2016 | 8 years ago

bricks
Bricklaying firms are amongst those in the midst of a cash flow crisis
Small companies in the construction industry are facing a growing cash flow crisis, as latest figures have shown the UK’s 20 largest property developers now take 56 days on average to pay sub-contractors.

Bricklayers and carpenters are, for example, facing major budgeting issues and financing delays a problem that could see many companies go out of business a survey from online business finance platform Funding Options has warned.

The issue of non-payment in the sector is made worse by an overall slowdown in the UK construction industry experienced since 2015.

Owners at smallconstruction firms’struggle to pay wages to staff or bid for future work, damaging the potential for the companies to grow.

Commenting on the news, Funding Options CEO, Conrad Ford, said that larger property developers feel as though they have a lot to gain from delaying payments. They know sub-contractors would be hesitant to raise issues for fear of losing out on future work, he explained.

there seems to be only two choices for the suppliers: accept these slow payments or lose the business going forward. Sub-contractors face the risk of bankruptcy if they are not paid within a reasonable amount of time increasing numbers of small construction firms need help to cover those gaps in cash flow.

The survey found that payment delays in construction had been growing since 2014. During that year, it took major property developers 48 days on average to pay suppliers.

According to Ford, businesses reserve the right to charge additional costs, including interest, to construction companies if terms of payment are breached, yet smaller firms rarely do so on the basis they need to avoid up upsetting the companies they rely on for future business.

Ford went on to say that addressing the issue of late payments in the construction sector was more important than ever were government to meet its target of building one million new homes in Britain by 2020.

These kinds of problems also won’t help the government in hitting the very demanding targets it has set for new home completions, he added.

Related Topics

HMRC targets small businesses in tax avoidance crackdown
22 May 2023

HMRC targets small businesses in tax avoidance crackdown

Read More →
How To Print SA302 Tax Calculations From Your Online Self Assessment Account
17 May 2022

How To Print SA302 Tax Calculations From Your Online Self Assessment Account

Read More →
Managing your tax liabilities so that it doesnt kill cashflow
14 December 2020

Managing your tax liabilities so that it doesnt kill cashflow

Read More →
The complete guide to UK business rates
4 September 2020

The complete guide to UK business rates

Read More →
VAT deregistration – Everything you need to know
4 September 2020

VAT deregistration – Everything you need to know

Read More →
What is the difference between a sole trader and a limited company?
21 August 2020

What is the difference between a sole trader and a limited company?

Read More →

If you enjoy reading our articles,
why not sign up for our newsletter?

We commit to just delivering high-quality material that is specially crafted for our audience.

Join Our Newsletter