Managing cash flow is the biggest challenges construction firms face in 2008 
(18/04/2008)
Despite the credit crunch and ongoing concerns of a recession, more than a sixth of construction firms reported their greatest achievement over the last year had been an increase in turnover and profits, securing a major contract came a close second. This is reassuring news and demonstrates there is still some level of confidence and growth in the industry in spite of ongoing economic uncertainty.
This more buoyant outlook could be the reason behind 15 per cent of construction firms choosing to inwardly invest, devoting time and money in developing the skills of the workforce and buying new equipment.
However, the familiar issue of late payment continues to plague the industry and more than two fifths of construction finance specialists admitted to spending at least 10 hours a week chasing late payment or bad debt. This was a particular issue for the plant and tool hire sector.
More than one fifth of companies believe that managing cash flow, late payment and bad debt will be the biggest challenges they face in 2008. According to Bibby Financial Services research these issues were considered to be even more important than dealing with increased competition and maintaining turnover in the year ahead.
When considering what could be done to improve the way the construction industry operates more than 25 per cent believed stronger payment terms would have the biggest impact, with a quarter continuing to identify industry red tape as an ongoing concern.
“With the economic slow down and tightening of lending criteria it is even more essential that construction firms review their financial arrangements carefully to plan and prepare for the year ahead.
“As our survey shows there are particular sectors within the industry that could benefit enormously from considering alternative cash-flow solutions such as Bibby Financial Services’ construction finance package. This offers a funding and a late payment function which could save on valuable management time and bad debt protection which can offer peace of mind that payment of invoices will be received even if a customer becomes insolvent,” says Jason Heath, Bibby Financial Services’ construction specialist.
Bibby’s Construction Finance package was developed as a result of extensive research into the issues faced by the construction industry and an in-depth understanding of the framework within which construction businesses work.
Related categories: Construction services
