The number of construction firms judged to be in danger of collapse leapt by a third at the end of last year.
This is a concerning article from Construction Enquirer.
* The number of construction firms on the brink of collapse grew last quarter to 7,849
* Civil’s Sector have had a slow start in 2024, affected by heavy flooding, followed by freezing temperatures and now stormy weather.
* Loans taken during the pandemic have become an added burden
Quote by Julie Palmer, Partner at Begbies Traynor:
“Now that the era of cheap money is firmly a thing of the past, hundreds of thousands of businesses in the UK, who loaded up on affordable debt during those halcyon days, are now coming to terms with the added burden this will have on their finances.
“As we saw in the previous quarter, the strain being placed on companies has extended well beyond the consumer-facing businesses with bellwether sectors, like construction and real estate, now in serious jeopardy as over 15,000 businesses face high risk of failure.
“Sadly, for tens of thousands of British businesses who should be looking ahead to 2024 with some degree of optimism, the new year will bring a fight for survival as the debt storm that has been brewing for years looks like it is breaking across the country.”
So what can you do if your construction company is struggling for working capital?
1 – Restructure existing debt – Could you consolidate away overdrafts, CBILS Loans or Bank Loans? We’ve seen our construction finance lenders release funds from work in progress which allowed them to pay off their existing debt and provided a funding line three times higher than their existing overdraft limit.
2 – Use a VAT or Corporation Tax Loan to pay your tax bills and spread the payments up to 12 months, rather than losing a big chunk of working capital during a tight spell.
3 – If Construction Finance isn’t for you, you could take out a short term, revolving credit facility. This allows you to dip into some funding when you need a cash injection and often there is no interest, just a flat fee so you know exactly what your cost of lending will be.
We specialise in Invoice Factoring, but we have access to specialist partners offering other cashflow solutions mentioned above.
If you would like us to help you understand the options available, please get in touch today.
Full article here: