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06/11/2017

‘Cowboy clients hampering’ SME builders

Words: Laura Edgar
Housebuilding / iStock

New research has suggested that ‘cowboy clients’ are ‘hampering’ three-quarters of SMEs in construction in their business.

The research, undertaken by the Federation of Master Builders (FMB), looks at the impact of ‘cowboy’ clients, who are delaying or withhold payment without good reason or make unreasonable demands.

Nearly three-quarters of construction SMEs think rogue clients are a serious problem for their businesses. Almost a quarter of respondents have had to wait for more than four months to be paid by a client or large contractor while less than a third are always paid within the standard 30 days.

As a result, the research suggests:

  • 30 per cent have had to delay payment to suppliers.
  • 20 per cent said late payment stopped them from having the confidence to grow their business.
  • 16 per cent have borrowed additional funds from a bank or other lender.
  • 8 per cent almost went out of business.
  • 5 per cent have had to withhold wages and salaries from staff.
  • 4 per cent had to let staff go.

Sarah McMonagle, director of external affairs at the FMB, said: “There are so many horror stories of people being duped by cowboy builders. However, our research shows that there’s a flip side to this story, with three-quarters of small construction firms being hampered by cowboy clients. Typical cowboy client behaviour can include a demand for the builder to complete tasks not included in the original brief or quote and for no extra payment. The worst type of cowboy client seeks to delay or withhold payment on spurious grounds, for instance, by discovering make-believe faults.”

Late payment is having a direct impact on the ability of construction SMEs to grow and prosper, said McMonagle.

As the UK moves toward leaving the European Union, the construction sector needs to be “firing on all cylinders” and the “last thing we want to see is thousands of builders going to the wall because of their customers refusing to pay on time”.

“We strongly recommend that builders and clients do everything they can to protect themselves by using a written contract that includes an agreed payment schedule. Clients rightly demand a high level of service from their builder but homeowners also need to keep their end of the bargain by paying on time.”

* The research came from the guest questions in the FMB’s State of Trade Survey for Q3 2017, for which 348 construction SMEs responded from right across the UK.


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Image credit | iStock

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