Update: For a more recent article on the construction sector, click here: Construction sector review 2019
Findings from a new report show that the Construction Sector is unfortunately subject to more payment delays that any other sector in the UK. With around 31 per cent of all payment incidents recorded, the findings also show that 250,000 business reported late payments, reaching a two-year high in the fourth quarter of 2015.
The Euler Hermes Quarterly Overdue Payments Report looks into 17 major industry sectors for reported debtor incidents. The incidents include companies not being paid for goods and services on time, as well as recording late or delayed payments and credit insurance claims. In the fourth quarter of 2015, the construction sector saw a 12 per cent increase in these sorts of incidents compared to the third quarter. Research showed that the most affected sub-sectors included general contractors, civil engineering companies and wiring and fittings tradesmen.
Head of underwriting at Euler Hermes UK, Dirk Kotze said “The growth in December’s output signalled a positive end to the year for UK construction, but some companies in the sector continue to grapple with the issue of low-margin legacy contracts, rising capital pressures and an increasing skills gap – all putting business and payment terms under pressure.”
If you are a contractor, it is important to ensure that your business is not put at risk by late payments and can thrive in spite of any payment delays.
Credit insurance is a great tool for protecting you against bad debt, at the same time encouraging faster payment times, and of course helping you to manage your credit risk.