Carillion collapse causes delay in small firms’ payments | City & Business | Finance



The delay has increased by two days in recent years, said finance firm Funding Options.

Construction businesses are waiting longer to pay suppliers, which could threaten the financial stability of a supply chain and cost jobs, it was warned.

Large construction firms can stipulate long repayment terms, with small suppliers to Carillion having to wait 120 days to be paid, said the report.

Following the engineering giant’s collapse in January, suppliers are still waiting to be paid, with some estimating they will receive a penny in the pound at most, said the report.

Payment delays are contributing to a high level of insolvencies in the construction industry, with 2,633 businesses going insolvent in 2016/17, an 8 per cent increase on the previous year, said Funding Options.

Chief executive Conrad Ford said: “A single late payment can be an issue even for larger and more successful firms, and worsening delays could create more insolvencies.

“Carillion’s collapse sent shockwaves through the industry, affecting smaller suppliers who will now never get paid what they are owed.

“Construction businesses have high overheads and labour costs, and many cannot afford to wait for payment for lengthy periods.”


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