Late payment to construction firms is the top issue stifling the industry’s growth, according to a report from Bibby Financial Services (BFS).
Planning for Growth – produced in conjunction with construction specialists The Vinden Partnership (TVP) – saw 53% of small and medium-sized businesses cite the issue as a key challenge.
It also revealed a lack of skilled workers and red tape as the main problems currently threatening businesses.
Helen Wheeler, managing director of construction finance at BFS, said the issue of late payment threatened the survival of many companies: “Issues associated with late payment continue to hinder the growth of thousands of small construction businesses every year, despite government efforts to improve the situation. This has a huge impact throughout the entire supply chain and will undoubtedly affect the performance of the construction sector this year.
“Our research shows that firms are facing other significant issues, such as increasing red tape and skills shortages, so there are substantial barriers for subcontractors and small construction firms to overcome.”
According to the report, government measures – including the Prompt Payment Code introduced in 2008 and the Construction Supply Chain Payment Charter announced last April – have not yet eased the woes of many small businesses.
Almost half of construction firms (47%) see a shortage of skilled workers as one of the biggest threats to their business, with many (39%) citing increasing levels of red tape as a serious concern.
Ms Wheeler said: “There are opportunities available, but many firms are unable to take on work because of a lack of working capital. Late payment causes significant cashflow issues and exposes businesses to risks brought about by the inability to pay suppliers and workers.”
The findings follow news that activity in the construction sector rebounded in January, although it remained weaker than the peaks of last summer, according to the Markit/CIPS construction Purchasing Managers’ Index.
H&V News launched its Time for Change campaign in 2014 to force a parliamentary debate about the issue of placing retention money into trust.
H&V News invites everyone involved with the industry to sign the petition, including individuals, companies and organisations of all description.