Subcontractors are made to wait an average of 56 days before receiving payment from the UK’s largest construction firms, new research has shown.
A report from business finance service organisation Funding Options showed that the average time subcontractors wait for payment from the UK’s 20 largest residential and commercial construction firms has increased for the second successive year.
The average wait for payment of 56 days during 2015/16 marked an increase from 54 days in 2014/15 and 48 days in 2013/14.
Funding Options CEO Conrad Ford said smaller subcontractors “face the risk of bankruptcy” if they are not paid within a reasonable amount of time.
“Major developers feel they have a lot to gain from delaying payments, knowing that their subcontractors would be hesitant to raise their issues for fear of losing out on future work.
“There seems to be only two choices for the suppliers: accept these slow payments or lose the business going forward.”
The report also said the situation has worsened due the slowdown in the construction activity since Q2 2015.
This follows on from data released from the Market/CIPS Construction Purchasing Managers Index, which reported that construction activity dropped to its lowest level since 2009 in July 2016.
However, the PMI has since improved, recording an expansion in activity in September.