It is the usual story in the sub-contracting sector of the construction industry, with the smaller cub-contractors feeling the squeeze from the main contractor “up the chain” .
Whilst the sector as a whole sees Brexit as a brake on current growth sub-contractors see it as less of a hindrance than the bigger main contractors. However, most sub-contractors feel that they have to accept contracts, as presented, or they risk losing the work, according to a recent survey by Bibby Financial Services. Most also said that even when the have accepted the contracted, they do not ultimately end up getting paid in full.
There is an obvious “power in balance”, and the failure to take advice at the initial contract stage and then at the payment stage is an indication that there may not be the funds available to do so, or that they are scared to rock the boat and risk future jobs.
Even when jobs are available there is the continuing pressure on cash flow, as materials and staff need paying long before the contractor is paid. According to the report a third of businesses are using bank overdrafts, and over a third use personal savings or unsecured borrowings.
Therefore, there are obvious benefits in firstly seeking to look to obtain more favourable terms in the initial contract which may entail looking for some professional advice, there are also benefits in looking into alternative sources of funding that may allow contractors to look to seek new, longer and larger contracts with the comfort of payment coming in.
If you are a sub-contractor suffering from bad debt or cash flow issues there is plenty of assistance out there and it is always advisable to get it at an early stage.