SME builders hit by trade debt burden

Construction businesses had an average trade debt of £484,000 during the last financial year, according to a new study.

The research, published on 23 July, was based on analysis of account details submitted to Companies House by 550 small and medium-sized enterprises (SMEs).

It found that those with between ten and 49 employees and a turnover between £2 million and £10 million were the worst hit, with each being on average £627,000 in debt, accounting for 16 per cent of turnover. 

Firms with up to nine employees and a turnover of less than £2 million each had an average trade debt of £41,000, accounting for 14 per cent of turnover.

Companies with 50-249 employees and a turnover between £10 million and £100 million had the highest levels of trade debt at £969,000 or 13 per cent of turnover.

The analysis was carried out by debt collection specialists Debt Guard.

Businesses facing financial challenges should always seek professional advice, at the earliest possible stage, to help identify options for resolving difficulties and make informed decisions about the way forward. Palmers can provide expert advice on a wide range of insolvency matters – for more information, please visit our website or contact Andrew Skinner.

Our expertise in construction law includes all aspects of contracts, including clauses relating to payment issues, such as progress payments, retention, time for payment and final payment, which can help to address late payment issues. For more information, please contact Adam Davis.