THE current cash flow problems in the construction industry are “unsustainable”, according to the Specialist Engineering Contractors’ (SEC) Group.
The organisation, which represents SMEs in the construction engineering sector, has claimed that due to the problems of “late and lengthy” payment periods and “lack of access to reasonably priced lines of credit”, SMEs are increasingly relying on their directors for funding.
SEC Group highlighted figures showing that directors lent their construction businesses £38 million in 2015/16. In 2013/4 this figure was £29.7 million.
Professor Rudi Klein, SEC Group CEO said, “With SMEs now relying more and more on their directors for their liquidity the cashflow position in the industry is now critical.”
SEC Group said this is against the background of the “poor state of the balance sheets” of some large UK construction firms.
The organisation is now calling for the Government to introduce a raft of measures including to mandate the use of project bank accounts across the whole of public sector construction, ring-fence cash retentions and mandate 30 day payments.