Specialist contractors are still having to endure waits of up to 60 days for payment but remain optimistic about future prospects for their business despite shrinking order books, according to the results of the latest FPDC state of trade survey for the third quarter of 2012.
More than 90 per cent of firms are being made to wait between 30 and 60 days for payment, with almost 10 per cent reporting that payment is taking between 60 and 90 days to come through. None of therespondents to the third quarter survey has experienced payment within 30 days, and almost three quarters believe that payment is slower now than 12 months ago.
One contractor told Specfinish: “Payment terms are becoming unsustainable for many subcontractors and my worry is that a number of irresponsible or desperate subcontractors will accept any terms to fill order books. This will end in disaster and create a huge problem for those responsible enough to refuse orders which compromise cash flow and the health of their company.” Despite hostile trading conditions, 42 per cent are optimistic about what the future holds, although more than half of respondents have seen no change in margins or the number of tender enquiries, and orders dwindling.
The government’s Green Deal, due to launch next year, offers a potential mine of new work for specialists but 62 per cent indicate that they don’t plan to take advantage of this. Those who express an interest plan to concentrate on installing external wall insulation systems, gaining the appropriate training and accreditation to enable them to become Green Deal certified and making main contractors aware of their capability.
Notwithstanding the opportunities that Green Deal could present, more than 95 per cent consider current government policy unhelpful to construction, citing a lack of bank lending to businesses, limited availability of private mortgages stifling the housing market and main contractors’ failure to observe the Construction Act as problems
FPDC interim director Steve Halcrow said: “Late payment continues to be a serious issue which is putting specialist contractors under extreme financial pressure. These poor payment practices are harming small businesses and could cause lasting and irreparable damage to the industry. Bad payment has to stop.”