OVER 70 PER CENT OF SMALL CONSTRUCTION FIRMS ON A KNIFE EDGE DUE TO LATE PAYMENTS
Posted by: electime 10th May 2018
Latest research reveals that the number of small construction firms struggling financially has risen dramatically since last year as too has the number of company owners suffering from mental health issues as a result of poor cashflow.
The findings come amidst fears over the knock-on effect to the supply chain following the Carillion collapse earlier this year.
74 per cent of the construction companies polled – 30 per cent more than last year – have been on the brink of bankruptcy or liquidation, or could be soon due to late payments. 48 per cent – also nearly a quarter more than last year – blame poor cashflow for their panic attacks, anxiety and depression, with some even having suicidal feelings and almost a quarter (22 per cent) experiencing emotions of ‘severe anger’.
62 per cent of owners said late payment issues had also meant that they had not paid themselves for some time, 35% had stopped or delayed bonuses, 15 per cent had had to pay staff late and 17 per cent had reduced their own salary.
If customers continue to pay late, 30 per cent of construction company owners said it will soon affect the progress and growth of their business, while 30 per cent said it had already impacted staff morale, recruitment and retention, 38 per cent had struggled to pay business rates and a quarter had struggled to pay mortgage or rental payments on their office.
The research commissioned by The Prompt Payment Directory (PPD), a payment rating website for businesses, comes despite the Government’s Prompt Payment Code (PPC) and last April’s enforcement of the Government’s new ‘Duty to Report’ scheme that requires large companies to report on payment practices twice a year. It also follows official figures confirming that the number of British businesses going bankrupt reached a four-year high for 2017, with one in every 213 companies falling into liquidation – the highest since 2013.
The survey polled 400 owners, MDs and CEOs of small construction businesses who suffer from poor cashflow due to late or outstanding invoice payments. Ahead of Mental Health Awareness Week (14-20 May), the research examined the personal, financial and business impact of late payments on owners and found the issue had worsened since PPD’s first study was launched last spring.
Out of the increased number of construction owners now suffering from health related issues due to late payments, 45 per cent suffer from stress, 39 per cent struggle with insomnia, 16 per cent experience depression and 14 per cent experience anxiety and panic attacks, whilst the remaining stated issues such as having suicidal feelings, self-harm, eating problems and paranoia.
