Delayed payments and rising costs see Britain’s builders tottering on collapse

A new report has concluded that late payments and rising costs are crippling Britain’s construction sector. Firms already in or at risk of financial distress make up more than eight in ten companies.

The report, Fixing the Foundations, was based on a survey of senior financial managers of property and building companies in the UK, and it found worrying trends.

• 93% report late payments from clients, contractors or supply chain partners, running an average of 53 days overdue.
• One in five (20%) firms now finance their own projects while they wait to be paid.
• 18% say late payments represent one of the single biggest threats to their business.

Rising costs are also a significant problem hitting profit margins. Inflation factors such as COVID, higher employment costs, the Russian invasion of Ukraine, the Middle East conflict and unpredictable US tariffs have not only increased costs but also delayed projects.

For contracts that were signed before climbing inflation, one in five companies have seen seriously reduced profitability and a further 18% say some have been delayed to the point of no longer being profitable at all. 

Another serious concern included supply chains, according to the report’s publisher, Menzies. 18% were not confident that their business could survive a single insolvency or change in the supply chain.

If you would like help with cash flow analysis and prompt payments, just let us know. We can look at your numbers together and ensure you are prepared.