Small construction firms were owed an average of £484,000 by their trade debtors last year, research has found. The study of 550 company accounts for the 2013-14 financial year by debt recovery legal specialists Debt Guard Solicitors found the average SME construction firm was owed £484,000 by trade debtors. Trade debt represents money owed to a business – including current invoices and overdue payments – for goods and services supplied to customers over the course of its financial year.
The survey found smaller companies of between ten and 49 staff were worst hit and were owed an average of £627,000 by trade debtors, which equated to 16% of their turnover on average.Medium-sized firms of between 50 and 249 employees were only slightly better off with average outstanding trade debts of £969,000, which equated to just 13% of their turnover on average. Firms with 1-9 employees and a turnover less than £2m each had an average trade debt of £41,000, accounting for 14% of turnover.
Mark Burgess, chief operating officer at Debt Guard Solicitors, said: “This research highlights the financial headache caused by outstanding and unpaid bills in the construction sector.