The construction industry has always been rife with cashflow issues throughout its various tiers, but these look set to worsen across the board, as the latest Bank of England figures dictate.
Recent months have seen a significant decline in construction loans from banks; a decrease of £1.5 billion in the last six months alone. This marks the biggest drop in lending since 2011.
Bank of England figures show that the net value of outstanding loans to contractors totalled £34.26billion in March, only to fall to £32.6 billion by the end of August.
Development project loans have suffered the greatest hit, having been slashed by £525million in the same six-month timeframe.
Other sectors hit include commercial and domestic buildings as well as civil engineering, amongst other areas of the construction industry.
Chief Executive of Cast Mark Farmer reports that with, “Tier one contractors facing cashflow problems as we’ve seen in Carillion’s case, restricted finance puts pressure on an outdated delivery model built on so many layers of passing down risk and accountability.”
He added that the construction industry is set to face more trying times to come, as post-Brexit plans warn of a dip in house prices.
This news comes at a time when the Construction Products Association has lowered its forecast for construction output for this year and the next.
The CPA has also predicted issues for the commercial and infrastructure sector, stemming from uncertainty surrounding Brexit as well as delays and cost overruns on Crossrail respectively.
With tough times looking set to toughen further still, managing cashflow has never been more relevant or indeed imperative for construction firms across the country.
CRS can help. By acting early and contacting us today, our team of debt recovery and credit control specialists can help protect your business for the worst of what is yet to come.
Get your cash in quickly with our help; call us today on 0114 236 1884.