A new tool will help construction firms assess credit risk in their supply chains as financial uncertainty continues to blight the sector.
The business health dashboard will provide firms with information about outstanding debts and payment risk along the supply chain. The tool was designed by the construction technology company Access Group along with credit rating provider Experian so that firms could make more informed decisions about new and existing clients and suppliers.
Users of the management tool are given access to Access Group’s internal data on suppliers which can then be checked against credit risk data from Experian. The dashboard also helps firms identify areas where productivity can be improved, which in turn can bring down risk and raise profit margins.
As the industry deals with delays in projects, a battle for materials and steep inflation, construction firms find themselves increasingly vulnerable to risk of defaulting on payments. This has a knock-on effect along the supply chain.
Administrations in the industry have been high when compared to historic levels, with more firms expected to go under in the months ahead, particularly those who are squeezed for cash. Data from Creditsafe provided to Construction News showed that a total of 31 firms went under in February, followed by 24 in March, 22 in April and 11 in May.
The Access Group’s head of construction Carol Massay cited data from restructuring specialists Begbies Traynor, which found that more than 75,000 construction firms could be at risk of collapse.
“Bad debt seems to be a sad fact of life for subcontractors, being placed under huge pressure to find a replacement and ensure the project doesn’t fall behind schedule when a supplier folds,” said Massey.
She added: “By partnering with Experian, our customers can use its credit risk data to obtain a far more detailed understanding of both customer and supplier portfolios and we are confident that this will have a hugely positive impact, not only on the decision making process, but also the bottom line.”
Source : ConstructionNews