Late payments hit mental health in construction sector
Late payments among small construction firms are causing mental health issues for half of the owners concerned, new research shows.
A survey by The Prompt Payment Directory found that 48% of small and mid‐sized construction owners have reported rising stress, depression and anxiety, as well as other mental health issues, in
the last year.
This compares to 27% in 2017 and can be tied into a number of factors that have influenced the construction sector in the early part of this year, including the high‐profile collapse of Carillion.
Personal finances have taken a hit too, as 62% of owners said they had not paid themselves at some point during the last 12 months.
More than a third reported issues when covering mortgage or rental payments, while a quarter said they had been forced to sell up and downsize or start renting due to a lack of finance.
Poor payment practices have blighted the construction sector for many years according to Federation of Master Builders chief executive Brian Berry, who added that the figures are “extremely
He called on the government to act, and has suggested that a failure to do so could damage the financial wellbeing of the sector.
Nearly three quarters (74%) of the 400 owners quizzed for the survey said that poor cash flow had hit their business and pushed it to the brink of collapse, or that it would soon do so unless their
This is a dramatic increase from 2017, when 44% of construction firm owners reported major financial issues within their operations.
Industry figures also reveal that more than 60,000 firms in the sector are facing some form of financial distress, a rise of more than a quarter year‐on‐year.
The Prompt Payment Directory suggest that the situation is worsening and that smaller firms are shouldering the burden throughout supply chains nationwide.
A third of construction firms report that a lack of payment was as a result of suppliers not being paid either, showcasing the domino effect that is seen throughout the supply chain.
Late payments can force small firms to consider insolvency or alternative measures a resolution cannot be found.
The key for any business facing difficulties is to act quickly, as alternative finance options or restructuring may be available to provide short or long‐term solutions.
By Phil Smith