Construction companies hit hard 8% debtor days increase
Online business supermarket Funding Options have recently released statistics to show that the construction sector is continuing to suffer from a steady increase of nearly 8% in debtor days comparing year to year.
The recent analysis of 13,213, UK construction companies have shown that during 2016/2017 the average debtor days has increased to 69 days. This is an 8% increase comparing the 64 day wait in the same period in 2014/15.
On the surface of this it may not seem like such a big issue, but those extra 5 days wait on a large invoice that is due may coincide with a large payment that is also due to go out such as wages, rent or even VAT. Now more than ever companies must ensure that the payments are received when they are due, picking up any issues or complaints early on can be paramount.
The full article on the funding options data can be found here.
Our opinion Jenny Esau
Construction has always been a high risk industry. Always first in and last out of any economic downturn. Therefore, it is vital for a supplier or sub-contractor in the construction sector to know their client, know the ultimate client (and the associated risk) and know their contract.
Robust ‘order to cash’ processes, procedures and escalation strategy is necessary for companies in this sector when it comes to getting paid. Companies need to be more proactive in this industry than others with regards to the contract terms they accept and performance of that contract accurately to ensure they get paid in full and on time.
We can assist if you are a sub-contractor or a supplier to help you implement the following procedures:
- Credit risk management
- Understanding and complying with the terms of contract
- What sanctions you can use for nonpayment as whether you are a supplier or a subcontractor
- Collection strategy
There are many options out there for you, from training your inhouse staff to outsourcing the whole function.
As a consultant we can help you with the right option that suits your business. Why not look through our website and get in touch.
