Report from Finishes and Interior Sector highlights how supply chain is bankrolling larger firms

Subcontractors working in the housing sector are providing more than 11 weeks of credit because of payment terms and delays, according to a new report by a specialists’ trade body.

The report from the Finishes and Interior Sector (FIS) said specialists are being forced to hand out between 60 days and 78 days of credit to clients because of hold-ups settling their bills and the way contracts are structured.

And it found that two-thirds of the 93 respondents say they have been hit by post-award price reductions – despite having previously agreed contracts.

plastering

Source: Shutterstock

The survey was based on responses from nearly 100 finishing and interiors trades working in the housing sector such as those from the ceilings, facades, partitions and plastering sectors

But it found that more than two-thirds “never take legal advice before signing a contract” and admitted: “Contracts are often bespoke and rarely checked by lawyers.”

The report, which covered firms working in the mid-rise and low-rise sectors and was based on answers given in the final quarter of last year, also said that 41% of those surveyed flagged cashflow being gummed up putting firms under financial stress.

Iain McIlwee, chief executive of FIS, said: “For too long, aggressive, price first, procurement, inconsistent and delayed payment, post‑award price reductions and regressive retention practices have weakened the specialist supply chain.

“These behaviours are structural barriers that restrict capacity, inhibit workforce development and diminish the sector’s ability to perform and ultimately invest in more modern methods of construction. They create volatility where stability is essential and they deter vital investment in people and modernisation.”

The FIS said the problems meant firms were seeing investment in workforce training and wider R&D being hacked back in an effort to keep cashflow running and cash reserves in the bank.

The report said that in order to preserve cashflow “firms lean heavily on merchant/manufacturer credit and corporate credit cards”.

McIIwee added: “FIS is calling on housebuilders, commissioning bodies, and policymakers to work collaboratively with the supply chain to address these challenges, restore confidence, and create a sustainable environment for future workforce investment.”

Topics