As the risk of construction companies becoming insolvent one of the often forgotten risk is the financial effect on the supply chain. As this article explains the cost to the supply chain of construction companies being unable to pay.Non-payment has always been a great risk in the industry which is why the Construction Act came into force on 1 May 1998.
This article illustrates that the problem has not gone away and if anything is getting worse again. This article also shows that for all the efforts of adjudicators and the construction profession the spectre of insolvency still casts a long shadow over the construction industry.
Despite usually rather onerous terms, the supply chain is not immune to the risks of insolvency and that cash flow in the construction industry is still a problem.
Finally, it also confirms that for all the effort to improve payment it is the firms at the bottom of the food chain who end up funding construction due to long payment terms. Perhaps, it is time to look again at the law on payment terms and legislate against long payment terms.
Revealed: how much collapsed firms owed supply chain in 2019