Construction Industry Debt – Worrying Rise
Debt recovery within the construction industry takes specialist knowledge and understanding of the sector. Construction contracts are often very complex, (sometimes deliberately so), and this results in businesses being paid less than they are owed, not being paid on their terms or not being paid at all.
Construction Debt Worrying Rise
Following the shock collapse of construction giant Carillion, new data has shown a worrying spike in the number of construction companies facing insolvency. More than 70% of companies in the industry in the UK have bad debts and this equates to an industry loss of around £2 billion. Research commissioned by Prompt Payment Directory of 400 owners, MDs and CEOs of small construction companies suffering from poor cash flow due to late payments and outstanding invoices found that 74% of them had been, or could soon be, on the brink of bankruptcy or liquidation due to its impact.
This type of bad debt doesn’t just take a financial toll, it has serious repercussions for the mental health of those involved, with 40% of those questioned reporting a negative impact on their mental health, such as anxiety, depression and panic attacks, being directly attributable to their cash flow problems.
If this trend of late payment to contractors continues it will hamper the growth and progress of these businesses as well as reducing staff morale and retention rates.
Prompt Payment Code
The government has tried to take some steps to improve the situation by introducing the Prompt Payment Code as well as the recently enforced Duty to Report Scheme requiring large companies to report on their payment practices twice a year. However, 73% of businesses questioned reported that they still waiting longer than the recommended 45 day terms.
Statistics relating to insolvency never make for pleasant reading, but it can feel even worse when the problems are caused by other businesses failing to act in accordance to their contracts. Many smaller businesses feel that they have no recourse in this situation as there is a genuine fear of souring a relationship and not being considered for future work, however, the result of this is that these contractors often end up having to bear the expense for labour and materials until payment is made or monies recovered.
Understanding construction debt
Debt recovery within the construction industry takes specialist knowledge and understanding of the sector. Construction contracts are often very complex, (sometimes deliberately so), and this results in businesses being paid less than they are owed, not being paid on their terms or not being paid at all. One key consideration is a quick reaction time in getting the money back and this is where working with an experienced partner such as Daniels Silverman can help. The speed of the recovery can mean the difference between the continuing success of a business or its failure. With a specialist knowledge and understanding of the construction sector, we can help to mediate between you and the debtor and recover the money quickly, getting it back into your business where it belongs. We understand the sensitive nature of relationships between businesses and know that our approach will recover your money without damaging that ongoing working relationship.
Instructing Daniels Silverman
Instructing Daniels Silverman to recover your debts means you will in the safe hands of an established, ethical and experienced partner who will work tirelessly to recover your money and protect both your reputation and your business relationships.
For a helping hand reconnecting with your customers and getting back on track, get in touch with us today on 0800 953 3631 or visit our website and start a chat session with one of our Business Development team.
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