We recently attended the excellent UKCW at Excel, London and found a huge number of those we spoke to were concerned about the risk of extended payment terms and aged debt.
Many smaller businesses want to grow, and there is lots of opportunity to do so currently… but don’t overextend your credit OR agree to handshake terms for new partners.
Read on to find out more, see what you can do and you can always contact us for free advice. 01245 976 716
And, in all seriousness, if you are struggling with your mental health and work in the industry (many are because of fears over insolvency due to slow paying customers) please contact the team at Mates In Mind (www.matesinmind.org)
Cash flow is crucial for any business, including those in the construction industry.
In fact, cash flow is especially important in the construction industry due to the high costs associated with large projects and the longer payment terms that are often part of contracts.
We recently attended the UK Construction show at Excel, London and discussed this exact issue with several businesses, large and small.
Extended payment terms, slow to close projects and increased cost of materials mean that many of the smaller businesses and subbies in the industry are carrying all of the financial risk, particularly when working with Tier1 and Tier2 developers.
In our local region, we have a huge increase in demand of trade as a result of Sizewell C and Tilbury 2 projects (to name just two) and though businesses are keen to take advantage of the opportunity to grow their business, it is a huge risk – unless they have the right terms in place and the workforce to follow up and keep cash on track.
Why is cash flow such a concern within the construction industry….?
1. Paying Suppliers and Subcontractors: Construction projects often require the purchase of materials, equipment, and the use of subcontractors. Without cash flow, it can be difficult to pay these suppliers and subcontractors in a timely manner, which can lead to delays in the project and potentially damage business relationships.
2. Managing Payroll: In addition to paying suppliers and subcontractors, construction companies must also pay their employees on a regular basis. Without cash flow, it can be difficult to meet payroll obligations, which can lead to low morale, high employee turnover, and a poor reputation in the industry.
3. Securing Financing: Construction companies may need to secure financing in order to fund projects or invest in new equipment. Lenders and investors will look at a company’s cash flow to determine their ability to repay loans or generate returns on investments.
4. Planning for Future Projects: Cash flow is also important for long-term planning. Construction companies need to have a positive cash flow in order to invest in new projects, hire new employees, and grow their business.
5. Dealing with Unexpected Expenses: Finally, cash flow is important for dealing with unexpected expenses that may arise during a construction project, such as equipment breakdowns, delays, or legal issues. Without sufficient cash reserves, a company may not be able to handle these expenses and could be forced to shut down or declare bankruptcy.
In summary, cash flow is essential for the success and sustainability of construction companies.
By managing their cash flow effectively, construction companies can improve their financial stability, build strong business relationships, and grow their business over time.
Looking for support? We can help.
If you’re looking for information on debt collection for businesses in Chelmsford, UK, here are a few key points to keep in mind:
1. Businesses in the UK have legal rights to recover debts owed to them. This includes sending demand letters, taking legal action, and using debt collection agencies to recover unpaid debts.
2. Debt collection agencies can be helpful in recovering debts owed to your business, but it’s important to choose a reputable agency that operates within the law and adheres to ethical standards.
3. It’s important to keep accurate records of all debt collection efforts, including copies of letters sent, phone calls made, and any legal action taken.
4. If you’re unsure about how to handle debt collection for your business, it’s a good idea to seek professional advice.
5. The UK government also provides guidance on debt recovery for small businesses, which you can find on the gov.uk website.
In summary, recovering unpaid debts is an important aspect of managing a business, but it’s important to do so within the bounds of the law and with the help of reputable professionals if needed.
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Get in touch if you are looking to improve your credit control or debt position for 2023.
Call 01245 976 716 or email email@example.com
Our advice is free and we do not charge your business when recovering aged debt. Our credit control management services start from just £250.00 per month.