Dawnus collapse sparks questions.
13/05/2019.
Auditors for Powys County Council in Wales say that the government should have done more to warn local authorities about financial problems at construction firm Dawnus. Business representatives have urged stronger government protections to ensure that suppliers are not brought down by late payments from larger companies following the Swansea-based construction group entering receivership in March.
Dawnus held contracts for three school projects in Powys signed in 2017, with the government giving the company a £3.5m loan to stay afloat in 2018. However, Powys council auditor John Brautigam says that the government gave local authorities “no information” on the fact that Dawnus was already facing financial difficulty and selling off its assets when the council signed contracts in 2017.
Calls for greater SME protections after collapse
In the wake of Dawnus’ collapse, the Federation of Master Builders (FMB) has criticised the “rife” practice of late payments across the construction industry, saying that stronger government support is needed to protect small suppliers from the potentially ruinous effects of late payment. Small businesses in Wales have reported losing as much as £30,000 after Dawnus entered receivership, with late payments now unlikely to ever be paid.
The Welsh government meanwhile has said that it will “consider any proposals to improve upon” its policy for supporting SMEs affected by late payments. New regulations introduced in January 2018 now require all government-funded construction projects worth over £2m to use Project Bank Accounts – meaning that money is paid into a joint, independent account rather than directly to the main contractor for them to distribute. However, FMB director Ifan Glyn says these measures do not go far enough, adding that the small construction firm representative body “would like to see the [£2m] threshold potentially lowered and look at extending that to other public sector contracts and long term rolling it out across the private sector too.”
Late payments plague construction industry
In UK-wide government measures, the Small Business Commissioner was launched by the government in December 2017 to help SMEs recover payments from larger companies. So far, the agency has recovered £3.8m for small UK businesses in late payments, with £3.1m of these recoveries made within the last six months.
Despite these efforts however, late payment practices have emerged as a prevalent and increasingly serious concern for smaller businesses in the construction industry, with an industry-wide ripple effect caused by the collapse of giant contractors including Carillion. Suppliers say there is a “complete lack of transparency” in payment practices, with SMEs having to “fight” to recover debts from big firms.
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Are you owed money by a builder?
With pressures on the housing market climbing, it is essential that you stay on top of the credit limits you grant builders and watch carefully for any late payments.
You can’t just assume they can and will pay you, no matter how big their name is.
It is essential to have credit management systems in place to monitor and check your customers credit worthiness.
It is also best practice to use a trusted third party like CPA to make sure you are paid on time by customers, no matter how good a name they have.
See the section below – About CPA.
Are you also at risk of collapsing?
If you are struggling like the above builder, rather than shutting down, do you realise you may have a hidden source of capital within your business waiting to be activated?
If you trade with other businesses and were often paid late then you could be entitled to significant compensation.
Under little known and underused legislation your business could be due huge amounts in compensation that you didn’t even know about.
That compensation could be the cash rescue your business needed.
How can CPA help?
CPA has developed a unique technology to dig into your accounting records and discover the cash injection you are due by means of compensation. The software does all the hard work. Our software interacts over the cloud with over 300 different software packages, working directly with your accounts package, just so long as it’s stored on a computer.
We do the work, you receive the cash.
If you have supplied goods and services to businesses on credit and were regularly paid late then you could be due significant sums in late payment compensation.
We are talking to companies and unearthing claims in the hundreds of thousands from former business customers who paid them late. Large business customers who abused their power to inflict unfair and sometimes illegal payment practices.
We are helping companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.
CPA is passionate about late payment
The Credit Protection Association has been protecting smaller firms against poor payment practices for over 100 years.
We are passionate about breaking the late payment culture that holds back the UK economy and threatens many SMEs with cash flow difficulties being the single biggest killer of Britain’s small businesses.
If you were regularly paid late we can help. Those former customers used you to boost their own cashflow, regularly paying you late.
As a result you had extra costs, you had the distraction of having to chase payment, you had opportunity costs because your capital was tied up in their late invoices.
Under little used legislation, you are entitled to compensation for those late payments.
Now you can boost your own cash-flow.
CPA can help unearth the those hidden treasures.
We have the technology to reveal the compensation you are due and we have the extensive experience and expertise to then turn those claims into cash.
Yes, CPA can help you boost your business cashflow.
Don’t let your bankers control you, contact CPA today.
About CPA
The Credit Protection Association can help!
Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.
At the Credit Protection Association, we provide first class credit information that can help you avoid being over extended to customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.
We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.
Companies in trouble usually have very bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.
If you supply to big builders like Dawnus or small ones, help us help you identify the risks.
Why use a third party collector?
As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When you customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.
Over the years we have collected billions in overdue invoices for our customers.
Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.
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