No-one could ever argue that construction is an easy option. Clients, suppliers, other contractors, employees - all of them can result in instant headaches. But one of the biggest problems - which could also be one of the most easily solved - is cashflow.
For any company in construction, managing cashflow is crucial. It can, almost at a stroke, see a business driven to the wall. Clients or contractors who refuse to pay, or take it upon themselves to extend credit terms to suit their own ends, are the worst enemy of anyone running a contracting business. You've paid the materials and labour bills up front, done a great job, and what do you get in return? A procrastinating accounts department or someone who doesn't even bother to acknowledge your follow-up letters and phone calls.
It happens week-in, week-out in construction, across all sizes of firms.
The government's Fair Payment Initiative is a big step in the right direction, but is currently only likely to apply to public sector projects. While the government is responsible for about 40% of construction spending in the UK, that leaves a massive 60% of work where subcontractors remain exposed to often unacceptable levels of risk.
As credit terms tighten and interest rates remain high, it will become increasingly difficult - not to mention expensive - for any firm to gain credit. The National Specialist Contractors Council's Fair Payment Campaign is welcome, and now it needs other industry organisations to back it.
The government, for its part, needs to make fair payment terms apply across the entire industry - from client to the smallest subcontractor and supplier. Surely, in a modern construction industry, fair payment should be the norm, rather than a pleasant surprise?
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