Suppliers lose hundreds of millions due to insolvencies
Over £367 million was lost by suppliers in 2019 due to insolvencies, according to new research by Construction News.
The investigation included analysis of the administrator reports of 19 failed contractors. The firms had a combined turnover of £1.2 billion. The analysis concluded that cash-flow was cited as the most common cause of insolvency.
“The average amount owed by firms in construction that go into administration is high, but sadly it’s no surprise, given that contractors higher up in the supply chain rely heavily on long payment terms”, commented Noble Francis of the Construction Products Association.
ECA has long campaigned for reforms to payment practices, particularly in the aftermath of the collapse of Carillion in 2018. Research from ECA and BESA in 2019 found that late payment was also causing a range of mental health issues among SME business owners.