The overall economic position for the first quarter 2018 highlights the significant impact of debt owed to UK companies with an incredible increase of 367.9% a rise of £580m on Q4 2017.
Creditsafe’s latest Watchdog Report for Q1 2018 reviews the impact of the Carillion failure on the construction industry. Figures compiled by Creditsafe crystallised the situation revealing a substantial increase of 73.3% in failures of UK construction businesses up to the end of March this year, equating to 943 companies going in to receivership. The report shows the industry sector total bad debt (owed to construction companies) in the first 3 months of 2018 stood at £16,997,825 whilst the amount the construction industry owed to suppliers, contractors and other companies in the same period was over six times that at a total £100,181,901.
According to the data, construction is second only to the Professional Service Industry for the number of CCJ’s issued during this time at 5,637 with a value of £14,862,819. Contraction in sales by 6.2% contributes to the unpredictability of the sector and despite numerous initiatives to reduce the late payment culture, payment statistics are averaging 16 days past terms for construction companies to be paid whilst only 11 days past terms for them to pay out. This in-balance between outgoings and incomings is influencing business stability.
Despite all the above Creditsafe indicate the construction sector as improving due to retained profit, employment and net worth saw a net boost in comparison to Q4 2017.
The Watchdog report reviews a number of industry sectors on a quarterly basis. Farming and Agriculture, Construction, Banking and Financial, Hospitality, IT, Manufacturing, Professional Services, Retail, Utilities, Transport and Wholesale.
CEO of Creditsafe Cato Syversen, in response to Q1 findings commented, “High profile corporate collapses and scandals in the last three months have been costly and undermined confidence in UK business. “It’s particularly disappointing following the previous three months, where we reported a fourth quarter rise in sales and fall in bad debt.”
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Source: Creditsafe’s Q1 2018 Watchdog Report