Blog 008 - Tombstone: At Least The Client's Year End Looked Good

This last week industry headlines have seen Specialist Trade Contractor’s sound the alarm that Galliford Try have been holding onto supply chain payments for longer than the contractual period. Unfortunately, this is nothing new and has lead many specialists to their business tombstones for generations.

The industry requires revolutionary reform to prevent this happening. Whilst the developers and Main Contractors may have year end figures to report or cash balances to report to the stock market, they owe any success they’re reporting to the very same specialists whose cash they are unlawfully withholding.

Consider a developers Year End from the view of the Developer:

Year end has arrived and the need to publish strong financial reports is more important than ever, strong books can affect bonuses, trade credit, stock prices, ability to borrow for new loans and industry confidence. Therefore, every effort should be made to report a strong year of a growth in the number of units constructed and moved to sales or offloaded totally and show a large cash surplus in the bank at the time of the report. In the eyes, of the developer, this is what success looks like and is a necessity.

Consider that very same Year End from the view of the Specialists employed by that Developer:

The clients year end has arrived, they are putting huge pressure on the trades to work additional hours, out of sequence and on top of each other in order to get a few additional units into stock before the deadline. This seems the case each year, the client increases the number of units being worked on and then (often without basis) threatens delays if not achieved. Specialists often lose overtime, preliminaries, damages and inefficiencies chasing down these annual deadlines. The thanks they then get is typically that months payment being delayed whilst the cash is held in the bank until the banking day closes on year end and a high cash position can be reported. All that work to then have to wait for your money back!

Looking after your clients and their needs is important, it’s a huge part of Specialist Contracting, however, relationships should be reciprocal. Most of the benefits of good year end figures apply equally to specialist contractors at their own financial year end, but I don’t ever hear of developers pushing variation payment through or accelerating units to increase turn over on behalf of the specialists in year end periods.

Holding onto cash for year end, could mean life end to some trade contractors and it is for this reason that we require urgent reform. There were a lot of lessons that had to be learned from the collapse of Carillion, but so far very little action. The big developers and contractors need to be held to account, until then, Specialist Contractor’s need to be savvy and plan for the inevitable. See below a list of the big developers and contractors and their respective year ends, please feel free to report to me any late payments during these periods:

Berkeley Homes (Capital) - End April

McLarens - End July

Redrow - End June

Persimmons - End December

Galliford Try - End June

Ardmore - End September

Henry Boot - End December

Kier - End June

Wates - End December

Main tip, know your client’s year end dates, these can be found by viewing their profile of the companies house web check area. https://beta.companieshouse.gov.uk/

If you’re struggling to get paid or want to discuss more about managing you client’s or own year end, drop me an email.