Late payments in construction sector hit five-year high
- Marc Shoffman
- On November 27, 2017
LATE payments to construction companies hit a five-year high in 2016, new research claims.
Business finance aggregator Funding Options analysed 13,213 UK construction businesses and found they face an average wait of 69 days for bills to be paid, up on 64 last year.
Payment times have been creeping up since 2012, according to the Funding Options data, released on Monday.
It took an average of 52 days for invoices to be settled in 2012, rising to 56 in 2013 and 64 in 2014 and 2015 before hitting the new high last year.
Conrad Ford, chief executive of Funding Options, said this was a major reason why there are so many insolvencies in the sector, with 2,557 construction firms going bust in 2016.
Read more: SMEs owed £26.3bn in unpaid invoices
“What this data again underlines is that the construction sector has a persistent problem getting clients to pay early on and this is only a further woe to add to the list,” Ford said.
“The aftermath of the Brexit vote suggests a fragile confidence, and a subdued appetite for risk, especially in the commercial building sector.
“Long supply chains in industries like construction mean that the ripple effect of delays is likely to affect many other businesses further down, with small and medium-sized enterprises hit the hardest. In an industry with high overheads in terms of materials and labour costs, this can be difficult to deal with.”
Ford said the construction sector should consider funding options such as peer-to-peer lending and invoice finance to minimise the impact of late payment and other poor payment practices.
Read more: SMEs strained by late council payments
Read more: SME access to finance ‘worse outside London’
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