Experian’s latest figures on payment performance for the third quarter of this year provide construction firms and their suppliers both reasons to be cheerful and reasons to be a tad wary.
Both property and construction firms are delaying payments less than they were a year ago, but over the latest quarter, both sectors have become slower to pay up.
Property firms on average are paying two days or so later than they were three months earlier and construction firms just a shade more than half a day later.
Currently construction firms are paying about 21 days late, while property firms are paying 35 days late.
Meanwhile utilities firms – another sector that provides solid amounts of work for construction firms – also stretched out payment over the past quarter from 20.5 days beyond payment terms on average to 22.7 days.
The real question to ponder is whether this represents just a small blip or whether this heralds tougher times ahead for smaller construction firms in their constant battle to get paid.
The Experian data series of payments beyond terms goes back to the tail end of 2007, so it is difficult to draw too much from it, as it tracks payment performance only for over the rather odd post-credit-crunch economic environment.
But that hasn’t stopped me drawing graphs as you can see above.
It’s an interesting one that tempts you to draw conclusions that probably aren’t there to be drawn and certainly not without some serious analysis – which in fairness wouldn’t be a bad thing.
Still it’s a tease which shows construction growth in percentage terms quarter on quarter against the change in the days firms are paying beyond terms, so the bigger the negative the better for those being paid.
It does seem to show – and clearly if you squint – that as construction output has grown so the payment beyond terms has shrunk. This you might expect and there appears to be an interesting if slightly weak correlation.
Whether there is any causation I will leave you to speculate.