Insolvency surges by 73% in construction sector

Bad debt and corporate failure hit the construction sector hard in the first quarter of 2018, new figures from Creditsafe reveal.

The latest Watchdog Report, which tracks performance in 11 sectors, found a 73% surge in corporate failure among construction firms.

Four of the top five corporate insolvencies involved Carillion companies, the construction giant that collapsed at the start of the year.

Total failures in the construction sector in the first quarter of the year amounted to 934 companies, compared to 539 during the final three months of 2017.

The number of suppliers with bad debts owed from within the sector also surged by 66%, while bad debts owed into the sector rose by a third.

On the first quarter, the construction industry was owed nearly £17 million, with the average amount of bad debt owed to construction firms from failed businesses nearly £28,000.

This was accompanied by a decline in sales of 6% in the sector between the final three months of 2017 and the first quarter this year.

To add to their woes, construction firms were paid on average 16 days past their agreed payment terms, while paying their suppliers an average of 11 days late.

Nearly 38,000 construction companies of 405,000 active firms are currently deemed to be at very high or high risk of insolvency, a jump of 8.8% quarter-on-quarter.

Despite the negativity to hit the construction sector, the number of new firms increased by 19% in the first three months of this year.

Creditsafe chief operating officer Rachel Mainwaring said the figures represent "turbulent" times for the sector, although she added that smaller firms could benefit by grabbing a larger share of the

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By Phil Smith


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