One in five tradespeople and small contractors struggle to pay for supplies as late payment impacts cashflow
In its annual Healthcheck of the UK’s tradespeople and small contractors, ECIC, the specialist insurer for the construction sector has found that late payment is an issue for 41% of firms, impacting electricians and plumbers the most.
Furthermore, one in five (19%) said they struggle to pay for supplies because their cashflow has been impacted by late payment and 14% have to fund specific resource just to chase outstanding payments. However, reflecting the high demands on skilled contractors, firms are taking control of the issue where they can, with 37% of the contractors surveyed saying they turn work away from known late payers.
John Flaherty, Business Development Executive for ECIC said: “It’s shocking that despite Government promises of support, late payment is still such an issue for the construction industry – to the extent that it affects contractors’ ability to buy supplies. This can have a serious knock-on effect for their business, delaying projects and damaging customer relationships.
“The good news is that where they can, firms are being selective about who they will work with, based on the customer’s previous payment performance. By taking a firm stand in this way, it sends a clear message that late payment won’t be tolerated.”
The findings of the survey follow the introduction of the Enterprise Act in May bringing changes to the speed of commercial insurance claims payments.
John Flaherty continues: “As part of the Enterprise Act introduced in May, unnecessary delays in claims payments should be a thing of the past, giving tradespeople some much needed certainty when they need to make a claim. It always helps to work with an insurer or broker who knows your business sector inside out and has a proven track record for claims. Biggest is not always best and we would urge contractors and tradespeople to seek evidence of claims service before placing cover.”
For more information about ECIC, please visit www.ecic.co.uk