Construction firms suffer cash flow problems over payment delays, report warns

Smaller construction firms are suffering "severe" cash flow problems because of delays in being paid by property developers, a report shows.

The biggest property developers are taking 56 days on average to pay sub-contractors, two days longer than a year ago, said online finance firm Funding Options.

The delay is damaging growth prospects for sub-contractors and even threatens their viability, it was warned.

Conrad Ford, chief executive of Funding Options, said: "Smaller sub-contractors face the risk of bankruptcy if they are not paid within a reasonable amount of time.

"Increasing numbers of small construction firms need help to cover those gaps in their cash flow.

"Major developers feel they have a lot to gain from delaying payments, knowing that their sub-contractors would be hesitant to raise their issues for fear of losing out on future work. There seems to be only two choices for the suppliers: accept these slow payments or lose the business going forward."

"These kinds of problems also won't help the Government in hitting the very demanding targets it has set for new home completions."

Photo from Ben Birchall / PA Wire