Small and medium-sized construction firms are being saddled with almost half-a-million pounds worth of trade debt due to late payments, according to a survey of Companies House accounts.
Commercial debt recovery law firm, Debt Guard Solicitors carried out a survey of 550 construction SMEs in the UK and found that contractors with 10-49 employees with a turnover between £2m-£10m were worst hit with each firm £627,000 in debt on average.
Construction businesses with nine or less employees and a turnover of less than £2m each had an average trade debt of just £41,000.
Medium-sized firms with 50-249 employees and a turnover of between £10m-100m had the highest levels of SME trade debt at an average of £969,000.
Trade debt is money owed to a business – including existing invoices and overdue payments – for goods and services supplied to customers over the course of a financial year.
Mark Burgess, chief operating officer at Debt Guard Solicitors, insists SMEs need greater protection to recoup trade debt and return to a more stable financial position.
“This research highlights the financial headache caused by outstanding and unpaid bills in the construction sector,” said Mr Burgess.
“It is clear that smaller SMEs in particular need much greater support in this respect, as many are facing the very real threat of closure due to trade debt pressure.
“Our message to all construction SMEs struggling with late payment is, ‘don’t write off your debt’, look at legal ways to professionally recover it as, by improving credit flow, this will help put your business on a more stable financial footing.”
Call us today on 0800 0523 555 or complete our enquiry form in order to book a FREE initial consultation