Builders Merchants gunning for late paying builders

11th April 2023

Faced with rising late payments, builders merchants have been gunning for late paying customers.

According to a report from accountants at Mazars, the top 20 building merchants are increasingly turning to winding up petitions against contractors who fail to pay on time.

The builders merchants have applied for winding up petitions against 185 constructors compared with just 44 in the previous year to the end of January 2023, a 420% rise!

With inflation particularly hitting the construction industry with dramatic rises in the costs of materials, with many items rising over 20% in the last year since the Ukrainian invasion, many builders are struggling and the merchants are not willing to carry them.

Mazars also said that the construction sector has seen  4,135 businesses enter insolvency in the 12 months to January 2023, a 49% rise, with 2,776 businesses going bust in 2021/22.

Mazars partner, Patrick Lannagan, said “Builders’ merchants are being forced to take more aggressive action on unpaid bills and that’s troubling news for the construction sector. Rising interest rates are causing problems across the real estate sector and that is spreading to the construction industry – which has its own problems dealing with a worrying level of inflation for the sector’s raw materials.”

“This is a sign that the financial pressures on the building industry are starting to rise sharply. Raw materials, energy, borrowing, labour – it’s all become more expensive. Add that to the long-term problem of late payment and the financial stress is enormous.”