The number of construction firms becoming insolvent increased by a fifth after the collapse of Carillion earlier this year.
According to recent findings, a total of 780 companies in the industry fell into insolvency in the first quarter of 2018, a 20 per cent rise on the same period a year ago.
The 2017/18 financial year saw 2,764 insolvencies among building firms, a six per cent increase on the previous 12 months.
“The collapse of Carillion sent shockwaves through the construction sector, and we are seeing more insolvencies as a direct result,” a spokesperson says.
“Large construction companies are infamous for squeezing the profit margins of the contractors and sub-contractors who work for them. These contractors often cannot negotiate against the terms set for them by their larger clients.
“Small to medium-sized enterprises and specialist sub-contractors have been hit particularly hard by Carillion’s fall, as many of them will have relied on the giant for significant amounts of their work.
“It is also likely that these sub-contractors would have had to write off virtually everything owed to them by Carillion.”
At Beavis Morgan, we work with a number of construction businesses, helping them with strategic planning, business turnaround and improving business performance for the future.
Through our partner businesses, BM Structured Finance and BM Advisory, we are able to help with sourcing and restructuring debt finance for SME businesses, as well as assisting with resolving issues which can impact on business performance and success, and finding innovative solutions for businesses and individuals in distress.