Construction SME survey finds late payment to be biggest worry

A survey has found that 52% of construction SMEs are worried about late payment issues.

The 60 SMEs (Small and Medium Enterprises) in the survey had turnovers of less than ВЈ15m. The questions were collected and analysed independently by Ciao Surveys for Lloyds TSB.

Other construction sector worries were:

rising cost of raw materials – 47% retaining current customers – 43% risk of suppliers failing – 30%

The verdict from 59% of construction bosses who replied was that they would like guidance on planning for a prolonged downturn and ensuring funding throughout the cycle…. the latter comes as little surprise given then way that banks have distanced themselves from the construction sector over the past nine months.

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That said, Lloyds TSB Commercial has launched an online guidance service, firmed up its face-to-face expert advice and has launched a series of 120 nationwide advice seminars.

Actions taken by the construction firms in the survey to combat concerns and reduce their exposure to the downturn include:

40% have reduced staff numbers or have cut their hours 35% have increased advertising activity 33% have cut the price of services and/or goods 22% have extended the time they’ve taken to pay suppliers

Other details to emerge show that:

32% plan to implement a pay freeze over the next 12 months 23% intend to cut the price of services.

Lloyds TSB introduced a small business charter last year and the main promises that the bank makes are:

to pass on future base rate cuts in 2009 not to switch to charging LIBOR  (the London inter-bank overnight borrowing rate) agreeing to “any reasonable request” for short-term finance not changing the price or availability of overdrafts during the period of a customer’s agreement, typically 12 months as long as their accounts are maintained within agreed limits.