More than 70% of companies in the construction sector firms suffer from bad debts, the report by Bibby Financial Services (BFS) and management consultant The Vinden Partnership (TVP) says. With 280,000 firms in the sector and 196,000 of them losing 拢10,000 a year, that is nearly 拢2bn gone.
Helen Wheeler, managing director of construction finance at BFS, said: 鈥淏ad debt is a serious issue for many construction businesses and represents a huge leakage in terms of sector output. Non-payment can occur due to customer insolvency, payment default or dispute and the issue is severely problematic for smaller firms who have often already footed the bill for labour and material costs.
鈥淭his places a massive strain on these businesses, often causing viable firms to fold. The problem is particularly acute for those who do not have sufficient working capital or bad debt protection in place to cover against this situation.鈥�
BFS recommends firms buy bad debt protection.
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