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10 February 2009
SMEs seek advice as redundancies rocket
The number of small and medium sized contractors (SMEs) seeking professional advice over redundancies last year nearly trebled as pressure from banks and late paying customers continues to grow.
Calls to the National Federation of Builders (NFB) employment helpline leapt by 175 per cent between last year and 2007. In December alone, over 100 calls relating to redundancies were logged.
Meanwhile, the volume of calls to the Federation’s legal helpline, which helps consult members on issues such as late paying customers, rose by 60 per cent in 2008 from the previous year fuelling concern about the widening impact of the recession.
The Federation believes that hundreds of SMEs who have so far kept strong order books despite the economic downturn are under threat from the lengthy credit terms of their customers.
Members have also reported concerns over tighter lending conditions from banks that have reigned in overdrafts with little notice and called in loans early. The NFB fears these actions are starving SMEs of the capital needed to continue running a stable business.
Late-paying clients ranged from major contractors to private individuals, and the NFB believes only strong action from the Government can halt the worrying trend as the economic downturn worsens.
The NFB would like to see tougher penalties introduced to firms who renege on payment terms and a Government backed scheme of naming and shaming the repeat offenders.
Members have been reporting invoicing periods of up to 120 days with many forced to employ a full-time member of staff specifically to chase late payments.
Julia Evans, chief executive of the National Federation of Builders, said: “Last week’s recent banking bail out, BERR’s plans for guaranteeing small business loans and the Government’s commitment to infrastructure spending are all hugely welcome moves for our members.
“But, we’re obviously concerned that there is still work to be done if we are to avoid these same sobering statistics next year.
“As businesses attempt to balance their books many deliberately withhold payment for completed work from contractors. The effect of this can be devastating to even the most robust SMEs.
“Right now, SME contractors are under enormous pressure from their banks yet, for reasons outside of their control, they are powerless to rectify their situation. They need legislative help to prevent illegal late payment practices.”
Figures released by the Construction Products Association earlier this month predicted that the industry is set for a three-year decline with output set to fall by 8.5 per cent in 2009.
She added: “We are looking down the barrel at one of the toughest periods for our industry in recent history. It is vital that the Government do all it can to protect the SMEs who play an irreplaceable role in the construction sector.”
The NFB represents over 1,500 builders and contractors across England and Wales. In addition to providing specialist advice and business services, the Federation, with a network of eight regional offices, lobbies local, national and European government on a range of issues to sustain positive trading conditions for members.
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Calls to the National Federation of Builders (NFB) employment helpline leapt by 175 per cent between last year and 2007. In December alone, over 100 calls relating to redundancies were logged.
Meanwhile, the volume of calls to the Federation’s legal helpline, which helps consult members on issues such as late paying customers, rose by 60 per cent in 2008 from the previous year fuelling concern about the widening impact of the recession.
The Federation believes that hundreds of SMEs who have so far kept strong order books despite the economic downturn are under threat from the lengthy credit terms of their customers.
Members have also reported concerns over tighter lending conditions from banks that have reigned in overdrafts with little notice and called in loans early. The NFB fears these actions are starving SMEs of the capital needed to continue running a stable business.
Late-paying clients ranged from major contractors to private individuals, and the NFB believes only strong action from the Government can halt the worrying trend as the economic downturn worsens.
The NFB would like to see tougher penalties introduced to firms who renege on payment terms and a Government backed scheme of naming and shaming the repeat offenders.
Members have been reporting invoicing periods of up to 120 days with many forced to employ a full-time member of staff specifically to chase late payments.
Julia Evans, chief executive of the National Federation of Builders, said: “Last week’s recent banking bail out, BERR’s plans for guaranteeing small business loans and the Government’s commitment to infrastructure spending are all hugely welcome moves for our members.
“But, we’re obviously concerned that there is still work to be done if we are to avoid these same sobering statistics next year.
“As businesses attempt to balance their books many deliberately withhold payment for completed work from contractors. The effect of this can be devastating to even the most robust SMEs.
“Right now, SME contractors are under enormous pressure from their banks yet, for reasons outside of their control, they are powerless to rectify their situation. They need legislative help to prevent illegal late payment practices.”
Figures released by the Construction Products Association earlier this month predicted that the industry is set for a three-year decline with output set to fall by 8.5 per cent in 2009.
She added: “We are looking down the barrel at one of the toughest periods for our industry in recent history. It is vital that the Government do all it can to protect the SMEs who play an irreplaceable role in the construction sector.”
The NFB represents over 1,500 builders and contractors across England and Wales. In addition to providing specialist advice and business services, the Federation, with a network of eight regional offices, lobbies local, national and European government on a range of issues to sustain positive trading conditions for members.
