Cowboy clients take a toll on UK builders

Late payments are having a catastrophic impact on SME firms

Late invoice payments made by ‘cowboy clients’ are putting undue pressure on the building trade.

A new study by the Federation of Master Builders (FMB) found a small proportion of its members had almost gone to the wall as a result of outstanding invoices that had gone unpaid for an extended period from both private and industry clients.

The industry body said the practice of withholding payment for completed works rivalled the damaged wrought by so-called ‘cowboy builders’.

“Late payment is having a direct impact on the ability of construction SMEs to grow and prosper, FMB director of external affairs Sarah McMonagle said.

“One in five builders say delayed payments from clients have stopped them from having the confidence to grow their business.

“Worse still, nearly 10% say that they nearly went out of business because of this.

“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 home owners also need to keep their end of the bargain by paying on time.”

The FMB research found almost three-quarters of the SME members surveyed recognised the ‘cowboy client’ problem and a quarter had been forced to wait more than four months for payment following the completion of works.

Some 30% of the businesses said they had been forced to delay onward payment to their own suppliers because they had not received the money they were due.

“There are so many horror stories of people being duped by cowboy builders,” Ms McMonagle said.

“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,” she went on.

“Nearly a quarter of construction SMEs have had to wait for more than four months for payment from a client or large contractor.

“Fewer than one third of builders are always paid within the standard period of 30 days and this is completely unacceptable.”

Picture: PA. Many small and medium-sized building contractors are having cashflow difficulties as they are forced to wait for payment.