Small construction firms are bemoaning the rise of "cowboy clients", saying late payments are hampering their business prospects.
According to research out today from the Federation of Master Builders (FMB), three quarter of small and medium construction firms think cowboy clients are a serious problem for their businesses, while nearly a quarter have had to wait over four months for payment from a client or large contractor.
Under a third said they were always paid within the standard 30 days, in the survey of 348 construction firms across the UK.
The knock-on impact of late payments disrupted firms in several ways. Nearly a third said they had to delay payment to suppliers, while a fifth reported that late payments had impacted their confidence about growing the business.
Some 16 per cent of the companies surveyed said they had to borrow additional funds from a bank or another lender, while some reported the effect was so extreme they nearly went out of business, had to let staff go, or had to withhold wages.
Sarah McMonagle, director of external affairs at the FMB, said: "There are so many horror stories of people being duped by cowboy builders. However, our research shows that there’s a flip side to this story with three quarters of small construction firms being hampered by cowboy clients."
Typical behaviour included a demand for the builder to complete tasks not included in the original brief or quote, and for no extra payment. There were also examples given of clients that seek to delay or withhold payment "on spurious grounds", such as discovering imaginary faults.
As we edge towards Brexit, we need the construction sector to be firing on all cylinders to shore up the wider economy. The last thing we want to see is thousands of builders going to the wall because of their customers refusing to pay on time.
We strongly recommend that builders and clients do everything they can to protect themselves by using a written contract that includes an agreed payment schedule.