The Federation of Master Builders (FMB) latest UK-wide study into the impact of 'cowboy clients' states nearly three quarters of SMEs think they are a serious problem for their businesses, while nearly a quarter revealed they have had to wait more than four months for a payment from a client or large contractor.
In addition, fewer than one third of contractors said they are always paid within the standard 30 days.
Sarah McMonagle, Director of External Affairs at the FMB, said the fact builders are not being paid within the standard 30-day timeframe is "completely unacceptable".
"There are so many horror stories of people being duped by cowboy builders. However, our research shows that there's a flip side to this story with three quarters of small construction firms being hampered by ‘cowboy clients'," she said.
-- Advertisement --
"Typical cowboy client behaviour can include a demand for the builder to complete tasks not included in the original brief or quote and for no extra payment. The worst type of cowboy client seeks to delay or withhold payment on spurious grounds, for instance by discovering make-believe faults."
The knock-on effect of late payment for construction SMEs include;
• 30% have had to delay payment to suppliers
• 20% say late payment stopped them from having the confidence to grow their business
• 16% had to borrow additional funds from a bank or other lender
• 8% almost went out of business
• 5% had to withhold wages and salaries from staff
• 4% had to let staff go
Ms McMonagle said as the UK edges towards Brexit, the construction sector needs to be "firing on all cylinders" to shore up the wider economy.
"Late payment is having a direct impact on the ability of construction SMEs to grow and prosper," she said.
"One in five builders say delayed payments from clients have stopped them from having the confidence to grow their business. Worse still, nearly 10% say that they nearly went out of business because of this.
"The last thing we want to see is thousands of builders going to the wall because of their customers refusing to pay on time. We strongly recommend that builders and clients do everything they can to protect themselves by using a written contract that includes an agreed payment schedule.
"Clients rightly demand a high level of service from their builder but home owners also need to keep their end of the bargain by paying on time."
(LM)
