New analysis by Creditsafe reveals eight of the 10 most searched for UK companies on the Creditsafe system in 2015 operate in the construction industry or are specialist suppliers to the sector.
Five of these firms directly work in property construction and development, while three are specialist retailers servicing the industry.
In terms of growth the construction sector has experienced a dramatic upturn in 2015. On average, 1,840 new construction companies open per month in the UK, compared to 862 in France and 230 in Belgium. In Germany, the number of construction companies fell by an average of 25 per month2.
While the UK construction sector has enjoyed a resurgence this year, with new companies established at a much higher rate than mainland Europe, it remains a volatile industry.
In March last year the UK’s third most searched for company, GB Solutions Limited was placed into administration, which the firm’s directors blamed on a cash flow issue3.
In addition Fairhurst Ward Abbotts (sitting at 10 in the annual most searched rankings) also called in the administrators this year because of “severe cash flow difficulties”. The firm was prominent as it held a royal warrant as builder and decorator to the Queen.
Rachel Mainwaring, operations director, Creditsafe UK said: “The construction industry is one of the most difficult to evaluate as firms rely on a constant influx of new contracts, so companies that file profitable accounts one year can soon find themselves in difficulty the next.
“The collapse of GB Building Solutions graphically exemplifies the importance of continual credit referencing. While the group had historically traded profitably, cash flow pressures forced it into administration leaving an alleged £30 million trade credit shortfall. The industry is heavily reliant on trade credit so it is vital that suppliers to construction firms continually monitor payment performance and company ratings to avoid potential losses.”