The construction industry in Scotland is facing an “epidemic” of invoice non-payment, according to a recent survey.
In its latest Scottish Construction Monitor report, the Scottish Building Federation (SBF) shows that 80% of all building firms have suffered late invoice payment in the last 12 months.
The SBF went on to show that the average amount owed in late invoices was £90,000, with an average of £6,000 being written off completely.
Talking about the findings, the federation’s executive director, Michael Levack, said:
“For Scotland’s construction industry, this survey demonstrates that late payments have become an issue of epidemic proportions, affecting an overwhelming majority of businesses, irrespective of their size.”
Levack said that facing difficulties is not the only issue, suggesting that continued missed payments contribute to more firms going to the wall. He continued:
“What is more, a majority of construction firms have been forced to write off outstanding payments worth thousands because of persistent non-payment.
“It is a tragedy that otherwise excellent businesses are forced into bankruptcy because of a lack of the cash flow they need to pay bills and salaries when customers fail to pay their bills on time – or at all.”
Many firms are now tackling the issue with invoice financing, such as discounting and factoring, which provides instant access to tied-up cash.
However, with industry confidence said to be hit by the issue, the failure of more than 160 Scottish construction companies in the past year will shock many.