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• 18 Aug

  Late Payments Expected In The Construction Sector

  Construction companies are bracing themselves for a wave of late payments, as a result of the uncertainty around Brexit and the UK economy.

  UK Late Payment Study

  

  Our recent late payment study found that the construction sector was one of the industry segments expecting to be worst hit as a result of Brexit (Britain leaving the European Union in March 2019). The extended timescale with the proposed exit is an issue in itself, creating a long period of uncertainty, regardless of the actual consequences once we eventually do leave the EU.

  Amongst the construction companies that we interviewed, over 96% of them said that they expected late payments to increase, as a result of Brexit. The remaining c. 4% said that they expected no change. It was worrying to see that no one thought that the situation might improve.

  Delays in getting paid are already widespread within the sector. It is common practice for some larger companies to delay paying smaller sub-contractors, and the prospect of that situation deteriorating further is worrying for the UK economy as a whole, as the sector is often one of the first hit if there is any downturn in the UK economy.

  Help Getting Paid In The Construction Sector

  Only recently we put together some advice for construction companies, help getting paid. Our advice sets out 7 steps to improve your chances of being paid on time.

  Our previous research suggests that the majority of firms in the sector use "applications for payment" rather than sales invoices to request customer payments for work. This, combined with the highly contractual nature of the work, means that traditional invoice financiers tend not to be able to finance the sector. However, there are an ever growing list of UK finance companies that are able to provide funding against applications for payment and some that have specialised in the sector, even being able to finance uncertified applications.

  If you want to know how this kind of funding could benefit the cash flow of your business please see the additional construction finance help on our site, and we would be happy to discuss the price and benefits to your business if you contact us. 

  By Glenn Blackman