New research conducted by the Federation of Master Builders (FMB) has turned the image of cowboy builders on its head, saying that three quarters of builders are actually under threat from cowboy clients.
The research was undertaken to assess the impact of late and withheld payments on SME construction companies, a major problem within the sector. It revealed that three quarters of companies think that cowboy clients are a serious problem for their businesses, with nearly a quarter of those surveyed waiting for more than four months for payment from a client or large contractor. The problem seems to be widespread, with only a third of respondents saying they are always paid within the standard 30 days.
The problem of late payment is having a negative effect on the industry, which is being exacerbated by the tough economic climate, and is prevalent throughout the supply chain.
More than a third of respondents say the delays have led to late payments to suppliers and 16% having to borrow additional funds from a bank or lender to keep the business afloat – with some eight per cent claiming they almost went out of business due to the issue. Companies are having to delay payments to staff and even make some redundant due to cash flow problems.
While 20% within the industry, say late payment has prevented them from growing their with a lack of security.
Sarah McMonagle, Director of External Affairs at the FMB, said: “There are so many horror stories of people being duped by cowboy builders. However, our research shows that there’s a flip side to this story with three quarters of small construction firms being hampered by ‘cowboy clients’. Typical cowboy client behaviour can include a demand for the builder to complete tasks not included in the original brief or quote and for no extra payment. The worst type of cowboy client seeks to delay or withhold payment on spurious grounds, for instance by discovering make-believe faults. Nearly a quarter of construction SMEs have had to wait for more than four months for payment from a client or large contractor. Fewer than one third of builders are always paid within the standard period of 30 days and this is completely unacceptable.”
McMonagle concluded: “Late payment is having a direct impact on the ability of construction SMEs to grow and prosper. One in five builders say delayed payments from clients have stopped them from having the confidence to grow their business. Worse still, nearly 10% say that they nearly went out of business because of this. As we edge towards Brexit, we need the construction sector to be firing on all cylinders to shore up the wider economy. The last thing we want to see is thousands of builders going to the wall because of their customers refusing to pay on time. We strongly recommend that builders and clients do everything they can to protect themselves by using a written contract that includes an agreed payment schedule. Clients rightly demand a high level of service from their builder but home owners also need to keep their end of the bargain by paying on time.”
If you would like to read more articles like this then please click here.