Late Payments Hurt – You Know It

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Insolvencies across the construction sector continue to rise and late payments are the driving force according to new data, writes Lynne Darcey Quigley, CEO of Founder Know-it.

The construction industry is an integral cog within our economy and if figures continue to read so poorly, then we are running the risk of causing irreversible damage to the sector.

At the moment, the overwhelming majority (69%) of construction contractors are waiting up to 60 days to be paid following an invoice being issued. To compound this issue further, 42% of contractors said that they experience clients requesting discount rates on services once a project is underway.

There seems to be a lack of consideration from most construction clients that these actions, when it comes to late payments or demanding cut-price costs, have knock-on effects to the industry as a whole. An industry which is regularly operating up to two months without being paid and constantly pressured into providing unsustainably low-cost services is going to end in a rising number of contractors closing down for good.

 

Shortchanged

Recent survey data conducted across the UK construction industry has lifted the lid on the dire state the industry is now in as a result of late payment culture. With an overwhelming majority (74%) of respondents saying that their financial wellbeing had been affected as a result of late payments

Half of respondents also reported that half of their invoices had been underpaid against what was initially agreed upon with the client.

 

Regain control

Following the economic battering of the Covid-19 pandemic on the industry, the worsening late payment culture could not be spiralling at a worst time. UK construction firms can no longer be viewed as a form of cheap labour or credit line in the eyes of their clients. It is now time for the industry to regain control of how it operates, and cash flow has to be at the forefront.

With little help coming from government, the construction industry should now consult technology and see first-hand the control and oversight they need to ensure they are paid on time. The latest solutions are readily available to ensure firms in the construction supply chain are able to credit check, chase and collect overdue payments all from one place.

Being able to identify and take action against any holes you may have in a business’ credit control process is just the first step towards building a healthier cash flow and stem the rising insolvency figures across the industry.

 

A family affair

We can’t continue to sit idly as the construction industry continues to be exploited for its services through late and often under payments. The huge contributions it makes to our economy each year and the jobs it creates for so many families mean that it is too valuable to watch crash and burn.

Thankfully for construction, technology is now readily available to turn the tide on this sentiment we are currently seeing and can hopefully help create a more transparent and compliant sector to operate within.

 

Know-it

Know-it is a cloud-based credit management platform which streamlines the credit control process so you can credit check and monitor, chase for payment, collect overdue unpaid invoices, insure invoices with trade credit insurance and get invoice finance all from one place.

The company partners with credit agencies and accountancy software such as Creditsafe, Companies House, The Gazette, Unsecured Creditors, Sage, Xero, QuickBooks, and FreeAgent. These partners provide businesses with essential real-time credit information that will get real-time credit information for companies, upload sales and purchase ledger and automatically send payment chasers when invoices are due. In turn, Know-it provides you with a place that brings it all together.

 

Picture: Know-it was founded in 2019 by Lynne Darcey Quigley. She is also the founder of commercial debt recovery company, Darcey Quigley & Co.

www.know-it.co.uk

Article written by Lynne Darcey Quigley, CEO of Founder Know-it
24th April 2024

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