Payment delays cause small construction firms cash flow problems

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Small construction firms are suffering severe cash flow problems due to delays in payments from property developers, threatening viability

Failure to pay small construction firms promptly is causing serious cash flow problems, it has emerged.

According to new data from online finance firm Funding Options the delay in payments is having a damaging impact on the growth capabilities of subcontractors and is even threatening their viability.

Fifty-six day wait for payment

Funding Options said the largest property developers were on average taking 56 days to pay subcontractors. This is two days longer than reported a year ago.

Chief executive Conrad Ford said: “Smaller sub-contractors face the risk of bankruptcy if they are not paid within a reasonable amount of time.

“Increasing numbers of small construction firms need help to cover those gaps in their cash flow.

“Major developers feel they have a lot to gain from delaying payments, knowing that their sub-contractors would be hesitant to raise their issues for fear of losing out on future work.

“There seems to be only two choices for the suppliers: accept these slow payments or lose the business going forward.

“These kinds of problems also won’t help the Government in hitting the very demanding targets it has set for new home completions.”

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