Carillion, the second largest construction firm in the UK, was placed into administration this week. It is estimated that Carillion used the services of more than seven thousand subcontractors who will now be at immediate risk of cash flow problems.
In this article we take a look at the key issues and potential cash flow solutions for Carillion sub-contractors.
Key issues for Carillion sub-contractors
A common problem within the construction sector is an over-reliance on a single customer. In this case many subcontractors may have relied upon Carillion for a majority of their revenue.
Until this week’s announcement they may have understandably believed that this was a safe strategy, since Carillion was such a large entity carrying out many government infrastructure projects.
The collapse of Carillion means that payments to sub-contractors for work carried out and work which was forward planned is now at risk. However, these suppliers will still have staff costs, material costs and many other costs which they need to pay to continue trading.
This means that it is likely that many sub-contractors will experience cash flow issues of varying severity, leading possibly to insolvency themselves.
They may need to take on short-term finance to help them through this difficult period.
Difficultly in securing short term finance
Accessing finance is particularly critical in the short term as Carillion sub-contractors move to pick up new contracts, or continue to work with the larger construction firms who pick up contracts left void by Carillion.
However, the appetite of the banks for lending to those in the construction sector has in the past been problematic, meaning construction firms may face difficulties plugging cash flow shortages.
Flexible finance for Carillion sub-contractors
However, help is at hand. At The Funding Store we help those in the Construction sector access flexible business finance solutions to cover cash flow gaps.
We work with multiple finance providers to find unsecured business loans or asset backed finance to your requirements. With competitive rates and your repayments spread over a manageable period, you can continue to focus on running your construction business.
We also realise that you may need to access finance immediately and we can offer a same day decision and funds in your account within 24 hours.
Contact our experienced team 7 days a week to discuss the options available to you.