Many construction firms have had to become more aggressive in how they approach customers over unpaid bills to avoid going under. 

Auditory firm Mazars revealed the sector had 4,135 businesses become insolvent in the year to January 2023. This is an increase of 49 per cent from the previous 12-month period when 2,776 businesses in the industry folded.

Partner at Mazars Patrick Lannagan told Construction Enquirer: “Builders’ merchants are being forced to take more aggressive action on unpaid bills and that’s troubling news for the construction sector.”

He noted that construction companies are facing a “worrying level of inflation for the sector’s raw materials”, as well as energy, borrowing and labour. 

Over the last year, the price of cement has risen by 25 per cent, ready-mixed concrete has shot up by 18 per cent, and insulating materials has soared by 41 per cent. 

According to the most recent Building Materials and Components Statistics, the price of raw materials last year was 54.4 per cent higher than in 2015, and even 25 per cent greater than in 2021. 

Additionally, the cost of labour has increased, as there is a national shortage of skilled tradesmen, and remaining ones are struggling with the cost-of-living crisis and are demanding higher wages.

Mr Lannagan noted having to deal with late payments on top of the rising costs means the “financial stress is enormous” for construction firms at the moment. 

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