Designing Buildings - User contributions [en]

Financial distress: Reading the signs in your supply chain

2017-12-03T14:14:15Z

TenderSpace: Created page with "The construction industry is notorious for late, reduced or non-payment. It is a sector where inspections, quality of work and exact specification can all be called into question..."

The construction industry is notorious for late, reduced or non-payment. It is a sector where inspections, quality of work and exact specification can all be called into question and where contractors have a proclivity to ‘pay when paid’. Add to this the challenges and financial uncertainty caused by Brexit, and the current economic turbulence we are all facing and it is easy to see why the financial situation is critical for many small construction businesses in the UK.

The key to success is obvious – find and keep reliable, solvent customers. Reducing the risk of non-payment is fundamental, especially if you are a supplier or purchaser in a longer supply chain. But how can you read the signs and know where to go for information on supply chain partners?

It can be time consuming to find and tricky to understand key financial information regarding potential clients. Companies House only offers abbreviated accounts and you won’t be able to view turnover or profit and loss. You can search online for CCJs and judgements against people and firms. But being able to effectively rate a business and understand whether a company is likely to stay solvent and pay on time can be a Herculian task.

Embracing technology and using online tools is a good start to navigating a supply chain and finding successful, solvent customers. Companies such as TenderSpace ([http://www.thetenderspace.com www.thetenderspace.com]) and its comprehensive suite of cloud-based, due diligence tools, allow clients to keep track of potential issues and receive alerts when there is a significant change in the financial standing of an organisation.

Amongst a host of tools, TenderSpace offers the crucial Finance Checker. It allows you to check the credit rating of potential and existing suppliers, ensuring they are solvent and are likely to continue to be so. Unless you perform a credit check, you just don’t know whether a client is capable of paying you.

The TenderSpace Finance Checker allows you, with just one click, to view information such as company details and directors, financial history, profit and loss, KPIs up to 10 years, credit score and limit, payment trends, CCJs and more. It works by using a Rating Model – a highly predictive analysis tool that can give you a view of your current and future customers.

[[File:TenderSpace Credit Report.jpg]]

The Finance Checker not only credit checks but also will notify you with any changes. It is a simple-to-use system that provides you with information that will allow you to make informed decisions about who to work with and will help you find steadfast suppliers and reliable customers. So how does it work?

Rating Model

The TenderSpace Finance Checker uses a Rating Model to do one thing: predict which UK companies are likely to fail within the next year. It was created by analysing companies that had failed within the previous 12 months and searching for commonalities.

To fail: a definition

The Rating Model defines the following as failure:

• In Receivership/Liquidation

• Administrator Appointed

• Appointment of Liquidator

• Meeting of Creditors

• In Receivership/Administration

• Administrative Receiver Appointed

• Administration Order

• Company is liquidated or is wound-up

Rating Bandings

Companies are rated 1 to 100 on a scale of risk. Higher risk companies get a low ranking, low risk companies rank highly. The Rating bandings is an easy-to-use segmentation tool which allows you to asses our rating model in 5 simple segments. TenderSpace Finance Checker also compares companies with similar business and then ranks companies by their likelihood of becoming insolvent, allowing for further and more insightful decisions.

[[File:Credit ratings.png]]

Today’s technology means businesses can keep track of all aspects of the supply chain, from checking finances, to asking pertinent questions of potential clients and identifying problems early. Technology can help increase transparency and improve the business environment for the UK’s small businesses.

This article was created by TenderSpace, whose free Finance Checker, developed in conjunction with CreditSafe, offers critical decision making information and live updates on possibly detrimental financial changes.

For more details on TenderSpace visit: [http://www.thetenderspace.com www.thetenderspace.com]

[[Category:Taxation]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]] [[Category:Procurement]]

File:TenderSpace Credit Report.jpg

2017-12-03T14:13:02Z

TenderSpace:

File:Credit ratings.png

2017-12-03T14:11:08Z

TenderSpace:

The causes of late payment in construction

2017-11-07T12:07:12Z

TenderSpace:

Late, and indeed non-payment has been a blight on the construction industry for decades. It is widely acknowledged as an industry with one of the worst payment records in the United Kingdom. As the industry contracts and possibly heads towards recession, it is an issue that is going to gain even more headlines over the coming months.

Only today, the Federation of Master Builders (FMB) has lambasted what they describe as “cowboy clients” – clients or large contractors - for spurious retentions and late payments. And last week saw the demise of Lakesmere, a UK cladding and roofing specialist with annual revenues in excess of £120m – so not a small concern. The reasons for late payment are complex and frequently not transparent.

The root cause must surely lie in a fundamental change in the structure of the industry that took place in the 1970’s – the birth of the “Management (or Main) Contractor”. It lead to construction companies that had previously employed specialists and direct labour, owned or leased their own plant, shifting these perceived liabilities off their balance sheet. There were relatively sound accounting principles for taking this route – the fewer liabilities that a company had on their balance sheet, the lesser the imperative to tender for work to service this employed capital and to keep the workforce occupied rather than sitting idly.

However, the net effect was to create a fractured and potentially very long supply chain consisting of many different verticals of specialists, who could be called upon when they were needed. This sounds fine in theory but the result is that money or value for payment for goods or services provided now has to pass through an increased number of hands.

There are, in essence, two reasons that payments might be delayed – retentions and cash flow.

[[File:Chain.png|link=File:Chain.png]]

Retentions

It is likely that a building contract will provide for the client to withhold monies, known as a retention, to allow for the circumstance when work has not been carried out timeously or indeed has not been carried out effectively or correctly. Indeed, the contract will most likely allow for a retained sum throughout the period of construction that reduces on a pre-determined contractual basis as the build progresses. The FMB alleges that clients are withholding payment having discovered “make-believe faults”. In instances where this might be the case, the professional teams involved should be able to establish, as a matter of fact, whether or not the works for which payment is claimed have been carried out correctly.

There are those within the industry – largely specialist contractors – who have long been calling for fundamental changes to, or indeed the abolition of, retentions. Whilst there is undoubtedly a clear argument for increased transparency and fairness, retentions serve an extremely valuable purpose. When used honestly and correctly, they serve as an excellent incentive to encourage a contractor to return to site to rectify any shortcomings that might have been found in their work. Without them, the only redress would be a legal one involving specialists and lawyers seeking formal redress through the courts or adjudication. Trust me, from bitter personal experience, I can assure you that once lawyers are involved, no one is going to be 100% satisfied with the outcome or indeed the time taken to achieve an outcome.

However, there may though be ulterior and less honourable motives for delaying payments – namely cash flow.

Cash Flow

Put simply, some clients and some contractors unfairly withhold payment for the simple purpose of improving their cash flow. They may not actually have the money at the time, there may be too many calls on the working capital that they have, they may themselves be waiting to receive payment or they may prefer the smaller contractor, their supplier, to bear the burden of providing finance rather than incurring bank or borrowing charges themselves.

Not one of these possible reasons is palatable or equitable. The government has taken steps to reduce the scourge of late payment, especially with regards to the last possibility, by placing a “duty to report” payment terms on large companies. However, this deals with only the very largest of UK ventures that have perhaps historically exploited their size and negotiating power. However, the problem of pate payment is endemic throughout many lower tiers of venture. Businesses, and SME’s in particular, need to become more vigilant and sophisticated in discerning those who can’t pay or those that won’t pay.

The Risks

Last year Lloyds Bank reported that UK SME’s are owed – sit down and re-read this number – it is not a typo - £586 billion in unpaid invoices (Source: Business in Britain, Lloyds Commercial Banking, 24th October 2016). In April 2017, the Zurich SME Risk Index identified that SME’s are owed an estimated £44.6 billion in late payments. These are breath-taking figures.

The UK construction industry is a vital foundation of our nation and economy. It is responsible for 7% of GDP and employs approximately 10% of the workforce. A staggering 20% of all UK businesses are construction related. Including businesses that are VAT registered or have employees, there are c. 300,000 businesses. The number of construction related ventures increases to 980,000 if you include sole traders. And very worryingly, for a variety of reasons that we can’t go into here, the construction is on the brink of recession.

A report during the summer by Begbies Traynor estimated that some 42,000 UK construction businesses are operating in a state of “financial distress”, frequently remaining solvent only because of cash injections from their directors. So, in other words, depending on which market size you look at, between 5 and 14% of UK construction companies are at risk of collapse.

The collapse of Lakesmere is not an apparition and will not be a one off occurrence. Businesses that are under capitalised will fail and as a supply chain is only as strong as its’ weakest link, projects will face delay or possibly collapse. Lakesmere are involved in four contracts on Crossrail – the government will step in there - but other projects are set to grind to a halt.

Whether a business withholds payment because it is overstretched, perhaps because it has grown to quickly or taken on difficult projects at the wrong price or because it chooses to delay payment, is arguably of little consequence to the SME…late payment can cause business collapse.

Is there a panacea?

Sadly, there is not. The best advice though, as in so many situations, is to be “knowledge rich”. What do we mean by that? Simply, ensure that you have knowledge of all of the businesses in your supply chain.

* Know the financial health of all of the businesses you are involved with, whether directly or indirectly.
* Make sure that you know that your immediate client is and continues to be solvent.
* Make sure that you know that suppliers who are delivering project critical items – windows for instance – are going to be able to satisfy your order.
* Ensure that payments that you make for goods supplied are only made after the supplier has been paid themselves otherwise they have the right under the sale of Goods Act 1979 to remove those goods.
* Watch out for deteriorating payment terms – a sure fire sign of cash flow issues

TenderSpace offer many solutions but our Finance Checker, developed in conjunction with CreditSafe, offers critical decision making information and live updates on possibly detrimental financial changes.

[[File:TenderSpace.jpg]]

Emma Stapleton FRICS Chief Operating Officer Email: emma@thetenderspace.com Telephone: 0845 468 5000 Mobile: 07876 174900 [http://www.thetenderspace.com/ www.thetenderspace.com]

File:Rics-tech-affiliate.jpg

2017-11-07T12:06:12Z

TenderSpace:

File:TenderSpace.jpg

2017-11-07T12:04:16Z

TenderSpace:

The causes of late payment in construction

2017-11-07T12:02:13Z

TenderSpace: Created page with "Late, and indeed non-payment has been a blight on the construction industry for decades. It is widely acknowledged as an industry with one of the worst payment records in the Uni..."

Late, and indeed non-payment has been a blight on the construction industry for decades. It is widely acknowledged as an industry with one of the worst payment records in the United Kingdom. As the industry contracts and possibly heads towards recession, it is an issue that is going to gain even more headlines over the coming months.

Only today, the Federation of Master Builders (FMB) has lambasted what they describe as “cowboy clients” – clients or large contractors - for spurious retentions and late payments. And last week saw the demise of Lakesmere, a UK cladding and roofing specialist with annual revenues in excess of £120m – so not a small concern. The reasons for late payment are complex and frequently not transparent.

The root cause must surely lie in a fundamental change in the structure of the industry that took place in the 1970’s – the birth of the “Management (or Main) Contractor”. It lead to construction companies that had previously employed specialists and direct labour, owned or leased their own plant, shifting these perceived liabilities off their balance sheet. There were relatively sound accounting principles for taking this route – the fewer liabilities that a company had on their balance sheet, the lesser the imperative to tender for work to service this employed capital and to keep the workforce occupied rather than sitting idly.

However, the net effect was to create a fractured and potentially very long supply chain consisting of many different verticals of specialists, who could be called upon when they were needed. This sounds fine in theory but the result is that money or value for payment for goods or services provided now has to pass through an increased number of hands.

There are, in essence, two reasons that payments might be delayed – retentions and cash flow.

[[File:Chain.png]]

Retentions

It is likely that a building contract will provide for the client to withhold monies, known as a retention, to allow for the circumstance when work has not been carried out timeously or indeed has not been carried out effectively or correctly. Indeed, the contract will most likely allow for a retained sum throughout the period of construction that reduces on a pre-determined contractual basis as the build progresses. The FMB alleges that clients are withholding payment having discovered “make-believe faults”. In instances where this might be the case, the professional teams involved should be able to establish, as a matter of fact, whether or not the works for which payment is claimed have been carried out correctly.

There are those within the industry – largely specialist contractors – who have long been calling for fundamental changes to, or indeed the abolition of, retentions. Whilst there is undoubtedly a clear argument for increased transparency and fairness, retentions serve an extremely valuable purpose. When used honestly and correctly, they serve as an excellent incentive to encourage a contractor to return to site to rectify any shortcomings that might have been found in their work. Without them, the only redress would be a legal one involving specialists and lawyers seeking formal redress through the courts or adjudication. Trust me, from bitter personal experience, I can assure you that once lawyers are involved, no one is going to be 100% satisfied with the outcome or indeed the time taken to achieve an outcome.

However, there may though be ulterior and less honourable motives for delaying payments – namely cash flow.

Cash Flow

Put simply, some clients and some contractors unfairly withhold payment for the simple purpose of improving their cash flow. They may not actually have the money at the time, there may be too many calls on the working capital that they have, they may themselves be waiting to receive payment or they may prefer the smaller contractor, their supplier, to bear the burden of providing finance rather than incurring bank or borrowing charges themselves.

Not one of these possible reasons is palatable or equitable. The government has taken steps to reduce the scourge of late payment, especially with regards to the last possibility, by placing a “duty to report” payment terms on large companies. However, this deals with only the very largest of UK ventures that have perhaps historically exploited their size and negotiating power. However, the problem of pate payment is endemic throughout many lower tiers of venture. Businesses, and SME’s in particular, need to become more vigilant and sophisticated in discerning those who can’t pay or those that won’t pay.

The Risks

Last year Lloyds Bank reported that UK SME’s are owed – sit down and re-read this number – it is not a typo - £586 billion in unpaid invoices (Source: Business in Britain, Lloyds Commercial Banking, 24th October 2016). In April 2017, the Zurich SME Risk Index identified that SME’s are owed an estimated £44.6 billion in late payments. These are breath-taking figures.

The UK construction industry is a vital foundation of our nation and economy. It is responsible for 7% of GDP and employs approximately 10% of the workforce. A staggering 20% of all UK businesses are construction related. Including businesses that are VAT registered or have employees, there are c. 300,000 businesses. The number of construction related ventures increases to 980,000 if you include sole traders. And very worryingly, for a variety of reasons that we can’t go into here, the construction is on the brink of recession.

A report during the summer by Begbies Traynor estimated that some 42,000 UK construction businesses are operating in a state of “financial distress”, frequently remaining solvent only because of cash injections from their directors. So, in other words, depending on which market size you look at, between 5 and 14% of UK construction companies are at risk of collapse.

The collapse of Lakesmere is not an apparition and will not be a one off occurrence. Businesses that are under capitalised will fail and as a supply chain is only as strong as its’ weakest link, projects will face delay or possibly collapse. Lakesmere are involved in four contracts on Crossrail – the government will step in there - but other projects are set to grind to a halt.

Whether a business withholds payment because it is overstretched, perhaps because it has grown to quickly or taken on difficult projects at the wrong price or because it chooses to delay payment, is arguably of little consequence to the SME…late payment can cause business collapse.

Is there a panacea?

Sadly, there is not. The best advice though, as in so many situations, is to be “knowledge rich”. What do we mean by that? Simply, ensure that you have knowledge of all of the businesses in your supply chain.

* Know the financial health of all of the businesses you are involved with, whether directly or indirectly.
* Make sure that you know that your immediate client is and continues to be solvent.
* Make sure that you know that suppliers who are delivering project critical items – windows for instance – are going to be able to satisfy your order.
* Ensure that payments that you make for goods supplied are only made after the supplier has been paid themselves otherwise they have the right under the sale of Goods Act 1979 to remove those goods.
* Watch out for deteriorating payment terms – a sure fire sign of cash flow issues

TenderSpace offer many solutions but our Finance Checker, developed in conjunction with CreditSafe, offers critical decision making information and live updates on possibly detrimental financial changes.

[[File:tts.jpg|154px|link=http://www.thetenderspace.com/]]

 
Emma Stapleton FRICS 
Chief Operating Officer 

Email:l emma@thetenderspace.com 
Telephone: [tel:0845%C2%A0468%C2%A05000 0845 468] [tel:0845%C2%A0468%C2%A05000 5000] 
Mobile: [tel:07876%20174900 07876 174900] 
 
[http://www.thetenderspace.com/ www.thetenderspace.com]

 
[[File:cid:C2889940-7E59-4771-860D-9C42738E34FB]]

File:Chain.png

2017-11-07T09:42:31Z

TenderSpace:

Technology helps quash conflict in the supply chain

2017-10-11T14:49:34Z

TenderSpace: Created page with "These are anxious times in the UK construction industry. Latest figures show that over 330,000 businesses are in financial trouble – and 40,495 of those are construction compan..."

These are anxious times in the UK construction industry. Latest figures show that over 330,000 businesses are in financial trouble – and 40,495 of those are construction companies. In fact the Q2 2017 Red Flag Alert from insolvency specialist [http://uk.businessinsider.com/begbies-traynor-red-flag-report-spike-in-financial-distress-for-smes-2017-7 Begbies Traynor] shows a staggering 22% increase in the number construction companies operating in a state of ‘significant’ financial distress, up from 33,222 a year ago.

It is a worrying trend. The construction industry is sadly notorious for a lack of transparency and late, reduced or non-payment. It is an industry where inspections, quality of work and exact specification can all be called into question. Relying heavily on paperwork, payments can be easily forgotten or misplaced. Put this alongside the proclivity for a contractor to pay when paid and both clarity and the financial situation can be very problematic. The August 2016 report from the Asset Based Finance Association (ABFA), showed payment delays in the construction sector increased 22% over the previous six month period from 67 to 82 days. Late payment can, and often does, lead to discussion, delay and dispute.

In light of the recent Grenfell Tower tragedy and the question over whether the complex supply chain was a contributing factor in the now-infamous cladding being fitted, transparency within the construction sector has never been more necessary. This can be done by taking proactive steps to put in place an overarching system of management and accountability, with the aim of creating a culture of transparency, accountability and collaboration and avoiding conflict.

Like many sectors, construction is now increasingly embracing technology. Online platforms such as TenderSpace ([[www.thetenderspace.com|www.thetenderspace.com]]) offer a comprehensive set of free cloud based tools that allow those involved in a construction project to confront the challenges of a potentially fragmented supply chain right through the process – from the planning and design phases, through to build and completion.

TenderSpace offers a Finance Checker which allows businesses to credit check suppliers, ensuring that they are solvent, and will issue an alert should the situation change. For a small business attempting to weather the current economic storm, the ability to check the credit rating of potential project partners, main contractors and supply companies is an important step in protecting yourself from late or non-payment and is key to avoiding conflict within the supply chain. Using the TenderSpace ‘Finance Checker’ means you can be sure your decisions on who to work with are well informed and your business is protected.

The functions TenderSpace offers also increases transparency across each project. Construction managers can keep track of all aspects of the supply chain and can easily understand what tests have been conducted, by which suppliers and on what products. Questions and queries can be asked, problems identified and conflict avoided.

These are tough times for the construction industry with the political and economic uncertainty set to continue. But embracing technology to avoid conflict and costly delays and ensure a transparent supply chain is a vital step to protecting your business and steadying the boat for the rough waters ahead.

[[Category:Publications_/_reports]] [[Category:Cost_/_business_planning]]

Technology and collaboration: Improving the construction supply chain

2017-08-14T08:08:35Z

TenderSpace: Created page with "The construction industry has always operated on tight margins and strict deadlines. Delays, remodelling or setbacks can easily lead to crippling budget overruns. In an uncertain..."

The construction industry has always operated on tight margins and strict deadlines. Delays, remodelling or setbacks can easily lead to crippling budget overruns. In an uncertain economic environment as in the UK currently, with Brexit, continued fiscal fragility post the 2008 crash and the continued ramifications from the Grenfell Tower disaster, these challenges are more acute than ever. At such times, it is important that businesses maximise efficiency, reduce waste and ensure that projects are kept on schedule. One way this can be done is by embracing technology.

The Internet has created a technological revolution in the construction industry. Computer Aided Design (CAD) is now widely used, allowing construction to begin before the design is finished and potential errors to be recognised and solved before they become problems. Enterprise Resource Planning solutions (ERP) aid in managing such complex areas as customer interactions, advanced catalogue management, stock control and mobile working, bringing together every business department.

With access to GPS and drones, construction companies can survey and map out hard to reach areas. From [https://en.wikipedia.org/wiki/Building_information_modeling#United_Kingdom Building Information Modelling (BIM)] generating 3D representations of a building and combining it with a construction schedule, to smartphone apps which can measure stockpile amounts simply by pointing the phone at the pile and walking around it, the Internet and its constituent parts have irrevocably altered the face of the construction industry.

One innovative company using the Internet and its technological capabilities to smooth the construction process is TenderSpace ([https://www.thetenderspace.com) https://www.thetenderspace.com)]. The company provides a host of resources to aid a construction process. Contractors can analyse build costs, search for reliable contractors and source products and supplies. One particularly vital tool is the ability to check the credit rating of potential partners and moreover receive alerts if there is a significant change in the financial viability of an organisation. At a time when research indicates that [https://www.trustnet.com/Investments/Article.aspx?id=201707310700075035M upwards of 40,000 construction companies operate in a state of “financial distress”] this is clearly important to know.

A further aspect that is particularly important with larger projects is that of the supply chain. This is something that the horrific blaze in Grenfell Tower brought into stark contrast, with [https://www.theguardian.com/uk-news/2017/jun/15/long-builder-chain-for-grenfell-a-safety-and-accountability-issue concern expressed in some quarters that the complexity of the supply chain might have led to lack of oversight]. Such complex supply chains might well be somewhat inevitable, particularly in big infrastructure projects which require varied specialisms. But by using technology, they need not in themselves be problematic. The revolution in ICT means that project managers are better able now than ever before to keep abreast of the myriad links in such a chain. [https://www.thetenderspace.com/toolbox/project-manager/ One such example is the project hub provided by TenderSpace, which provides a one-stop-shop for a project manager’s needs. Here one can manage all aspects of a project from bids and tendering, through due diligence, to workflow management and collaboration.]

These are undoubtedly challenging times for the construction industry, as indeed they are for many sectors. But while individual companies can do little about the macro economic environment, they can examine their own processes and procedures to maximise opportunities while ensuring best value to clients and customers. Embracing technological innovation will augment their ability to this. Whether it be analysing costs, running credit checks on prospective partners or keeping track of the supply chain, technological advancements can help companies to meet the demands that the current economic environment presents them.

[[Category:Research_/_Innovation]] [[Category:Construction_management]] [[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]] [[Category:Procurement]]

Six steps to combat late payment

2017-06-27T14:58:52Z

TenderSpace:

The latest research figures show that the construction industry continues to suffer from the problem of late payment. Figures from the [https://www.gov.uk/government/organisations/department-for-business-energy-and-industrial-strategy Department for Business, Energy and Industrial Strategy] show that UK businesses as a whole are owed around £26.8bn. Construction companies are hit the hardest by late payments, forced to wait 82 days for invoices to be paid and according to the recent [http://www.eulerhermes.co.uk/euler-hermes-UK-and-Ireland/mediacenter/news/Pages/Quarterly-Overdue-Payments-Report-Q4-2015.aspx Euler Hermes Quarterly Overdue Payments Report], late payments in the construction industry rose by 27% during 2015.

A recent [http://www.theconstructionindex.co.uk/news/view/most-councils-flout-prompt-payment-law Freedom of Information investigation] by the [http://www.eca.co.uk/ Electrical Contractors’ Association (ECA)] revealed that the majority of local authorities in England are breaching their legal duty to ensure that their supply chain is paid promptly. The ECA points out that this makes it harder for small businesses to thrive and grow and it has called on Government to impose penalties on those councils who flout the law. Fifty two per cent of the councils investigated have not yet built in a contractual requirement for payment to flow throughout the supply chain within 30 days, as required by law, and 28 per cent have said they have not and will not be building a contractual requirement in at all.

These late payment issues are exacerbated by the absence of collaboration and transparency in the construction supply chain. By their very nature, construction supply chains are hampered by the fact that every building is different, developed by a team of consultants, contractors and suppliers, which may never have worked together before and may never again. With margins often squeezed from the top down and late payment being the norm, transparency and the trust it builds has been lacking for decades in the construction industry.

It is unfortunate that there is an entrenched belief that openness leads to exploitation of margins; in reality the lack of it leads to greater costs, delays and uncertainties. Increased transparency should combat bid rigging and mitigate the risk of corruption, which is present in this country too, as the [http://www.insidehousing.co.uk/barratt-director-arrested-over-contracts-probe/7017306.article arrests of managers] from a high profile housebuilding company in late 2016 have illustrated.

It is important that housebuilders and developers protect themselves as far as possible from the chance of late or non-payment and technology will help them to do this.

The ability to check the credit rating of potential project partners, main contractors and supply companies is vital. Construction companies can protect themselves further by getting invoices out on time, chasing up all late payments and consider including late payment fees on invoices.

Late payment remains a major issue in the construction industry, but with the help of technology, increased transparency and the enforcement of legislation, things can only get better.

Six steps to combat late payment:

# Check the credit risk of potential client

The ability to check the credit rating of potential project partners, main contractors and supply companies is really important. Unless you do a credit check, you just don’t know whether they’re capable of paying you. ‘Finance Checker’ is a feature available to [http://www.thetenderspace.com TenderSpace] users which produces Credit Risk Reports which allow a subscriber to determine the creditworthiness of your business partners in an instant.

2. Get invoices out on time

This is an obvious one, but clearly one of the biggest reasons for late payment. Yes, it is tough when you’re busy on site, but get invoices out on time, quickly and accurately.

3. Make time to chase late payment

You have to chase late payment, no matter how busy you are. If you use an online accounting service, you can set payment reminders for your clients. Remember, communication with the person who actually pays you (an accounts department or the householder) is important and people, rather than invoices, are harder to ignore. Using the [http://www.thetenderspace.com Finance Checker] you can also see if you are dealing with a “can’t pay” or “won’t pay” client or supplier.

4. Put effort into your invoice design

Make sure your invoices are professional and well designed, containing all the information your clients’ finance departments require, such as Purchase Order numbers. This will help to ensure prompt payment.

5. Late payment fees

If your invoice clearly states payment terms, but a client has not paid them, you could consider a late payment fee. This could be contentious so use it wisely.

6. Shorter payment terms

Some clients want your work as quickly as possible, so why not explain therefore that payment terms for certain work are shorter than a traditional 30 days. This could work for emergency work or smaller jobs needed more urgently.

[[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]

Six steps to combat late payment

2017-06-27T14:56:23Z

TenderSpace: Created page with "The latest research figures show that the construction industry continues to suffer from the problem of late payment. Figures from the [https://www.gov.uk/government/organisation..."

The latest research figures show that the construction industry continues to suffer from the problem of late payment. Figures from the [https://www.gov.uk/government/organisations/department-for-business-energy-and-industrial-strategy Department for Business, Energy and Industrial Strategy] show that UK businesses as a whole are owed around £26.8bn. Construction companies are hit the hardest by late payments, forced to wait 82 days for invoices to be paid and according to the recent [http://www.eulerhermes.co.uk/euler-hermes-UK-and-Ireland/mediacenter/news/Pages/Quarterly-Overdue-Payments-Report-Q4-2015.aspx Euler Hermes Quarterly Overdue Payments Report], late payments in the construction industry rose by 27% during 2015.

A recent [http://www.theconstructionindex.co.uk/news/view/most-councils-flout-prompt-payment-law Freedom of Information investigation] by the [http://www.eca.co.uk/ Electrical Contractors’ Association (ECA)] revealed that the majority of local authorities in England are breaching their legal duty to ensure that their supply chain is paid promptly. The ECA points out that this makes it harder for small businesses to thrive and grow and it has called on Government to impose penalties on those councils who flout the law. Fifty two per cent of the councils investigated have not yet built in a contractual requirement for payment to flow throughout the supply chain within 30 days, as required by law, and 28 per cent have said they have not and will not be building a contractual requirement in at all.

These late payment issues are exacerbated by the absence of collaboration and transparency in the construction supply chain. By their very nature, construction supply chains are hampered by the fact that every building is different, developed by a team of consultants, contractors and suppliers, which may never have worked together before and may never again. With margins often squeezed from the top down and late payment being the norm, transparency and the trust it builds has been lacking for decades in the construction industry.

It is unfortunate that there is an entrenched belief that openness leads to exploitation of margins; in reality the lack of it leads to greater costs, delays and uncertainties. Increased transparency should combat bid rigging and mitigate the risk of corruption, which is present in this country too, as the [http://www.insidehousing.co.uk/barratt-director-arrested-over-contracts-probe/7017306.article arrests of managers] from a high profile housebuilding company in late 2016 have illustrated.

It is important that housebuilders and developers protect themselves as far as possible from the chance of late or non-payment and technology will help them to do this.

The ability to check the credit rating of potential project partners, main contractors and supply companies is vital. Construction companies can protect themselves further by getting invoices out on time, chasing up all late payments and consider including late payment fees on invoices.

Late payment remains a major issue in the construction industry, but with the help of technology, increased transparency and the enforcement of legislation, things can only get better.

Six steps to combat late payment:

# Check the credit risk of potential client

The ability to check the credit rating of potential project partners, main contractors and supply companies is really important. Unless you do a credit check, you just don’t know whether they’re capable of paying you. ‘Finance Checker’ is a feature available to [http://www.thetenderspace.com TenderSpace] users which produces Credit Risk Reports which allow a subscriber to determine the creditworthiness of your business partners in an instant.

# Get invoices out on time

This is an obvious one, but clearly one of the biggest reasons for late payment. Yes, it is tough when you’re busy on site, but get invoices out on time, quickly and accurately.

# Make time to chase late payment

You have to chase late payment, no matter how busy you are. If you use an online accounting service, you can set payment reminders for your clients. Remember, communication with the person who actually pays you (an accounts department or the householder) is important and people, rather than invoices, are harder to ignore. Using the [http://www.thetenderspace.com Finance Checker] you can also see if you are dealing with a “can’t pay” or “won’t pay” client or supplier.

# Put effort into your invoice design

Make sure your invoices are professional and well designed, containing all the information your clients’ finance departments require, such as Purchase Order numbers. This will help to ensure prompt payment.

# Late payment fees

If your invoice clearly states payment terms, but a client has not paid them, you could consider a late payment fee. This could be contentious so use it wisely.

# Shorter payment terms

Some clients want your work as quickly as possible, so why not explain therefore that payment terms for certain work are shorter than a traditional 30 days. This could work for emergency work or smaller jobs needed more urgently.

[[Category:Contracts_/_payment]] [[Category:Cost_/_business_planning]]

Managing self-build projects using TenderSpace

2016-04-05T09:08:42Z

TenderSpace:

= Introduction =

Many people dream of building their own home. A place that does what they want it to, not what a developer thinks they want. A home where the rooms are in logical places, the accommodation flows intelligently and where there is the storage they will need.

A 2011 YouGov poll commissioned by the Building Societies Association suggested that 1 in 2 people would consider building their own home if they felt that they could. However, undertaking a self- build project can be the most expensive and stressful undertaking individuals ever undertake. The process is very complicated and extremely time consuming and the risks can be high. Projects can get out of control, with costs increasing, quality reducing and programmes slipping.

As a result, self building only accounts for around 10% of new homes built in the UK. This compares very unfavourably with other EU countries such as Austria, where more than 80% of new homes are self built.

There are a wide range of resources available to help self-builders, offering advice about different procurement routes, design options, costs and so on. But these can themselves be overwhelming, and it can be difficult to know where to start.

[http://www.thetenderspace.com TenderSpace] is a free platform offering a range of tools to enabling self-builders to safely, securely and efficiently manage their projects from the first sketch idea to the completed building. It makes the process easier and less time consuming to manage, helps avoid common pitfalls and reduces the risk of things going wrong.

= Selecting the right team =

Self builders will usually start with a rough idea of what they want, a plot of land and probably a sketch or a design brief of some description. They then need to find an designer and select a procurement route; either appointing a main contractor to manage the works, managing the project themselves or perhaps appointing a consultant such as an architect as project manager. Finding the right professionals is critical.

The [http://www.thetenderspace.com/toolbox/team-builder/ Team Builder] component of TenderSpace can help find professionals, trades and contractors to get the project underway. It gives the reassurance of knowing that all available opportunities have been explored and saves hours of searching the internet. For instance, there may be contractors or specialists outside of the area with just the expertise needed.

Interested parties will respond, with communications neatly stored and organised inside the [http://www.thetenderspace.com/toolbox/project-manager/ Project Manager] component of TenderSpace. This is the area of the platform where the entire project is managed. Drawings can be uploaded, stored and shared, the project team can be messaged, comments made, deadlines set and progressed monitored.

Self-builders can find out whether prospective professionals, trades and contractors have the right experience for the job by looking at their profile where they will also find reviews and references. In addition, the [http://www.thetenderspace.com/toolbox/finance-checker/ Finance Checker] component of TenderSpace shows relevant financial information. This is a crucial part of the assessment process. The construction industry is notoriously late at paying contractors and suppliers, and this can leave them with cash flow problems that frequently result in insolvency. For this reason, project managers often recommend that individual contracts should not account for more than 20% of the annual turnover of a company. An episode of Channel 4’s Grand Designs from East Sussex screened in September 2015 demonstrated how a poor choice of contractor lead to a home builder losing £80,000 when the contractor became insolvent.

= Project management =

Once a team has been selected, [http://www.thetenderspace.com/toolbox/project-manager/ Project Manager] allows users to store up to 1Gb of drawings and data to keep track of the project and make sure everyone is working on the most up to date information.

The [http://www.thetenderspace.com/toolbox/cost-analysis/ Cost Analysis] tool helps project managers compare results when tenders are sought, showing at a glance where contractors are over or under compared to budget figures and helping reveal any inconsistencies.

The [http://www.thetenderspace.com/toolbox/sercha Sercha] tool helps find manufacturers and suppliers of particular components or materials. One simple form allows users to upload the specification and other relevant details, such as when materials are needed, and the quantities required. The form is then sent directly to relevant businesses. So for instance, if aluminium windows are needed, select ‘aluminium windows’ from the menu in [http://www.thetenderspace.com/toolbox/sercha Sercha] and the project requirements will go to all aluminium window manufacturers and suppliers in the UK. This can save huge amounts of time searching directories or the internet, or leaving unanswered messages. Instead responses are only received from businesses that are able satisfy the requirements.

= Conclusion =

The UK government believes self building can result in properties that are higher quality, greener and cheaper, highlighting the fact that '...The average cost of a ready-made home is now more than £232,000, but a budget of £150,000 is usually adequate to build a three to four-bedroom house..'

But potential self-builders are put off by the complexities of the construction industry and the consequences of something going wrong.

[http://www.thetenderspace.com TenderSpace] provides a range of tools to help self-build projects run as smoothly as possible, avoid common problems and help deliver dream homes.

-----
This article was created by Emma Stapleton, FRICS, Founder & COO [http://www.thetenderspace.com TenderSpace].

--[[User:TenderSpace|TenderSpace]] 10:08, 05 Apr 2016 (BST)

= Find out more =

== Related articles on Designing Buildings Wiki ==

* Building an extension.
* CDM for self-builders and domestic clients.
* Community right to build.
* Custom-build homes.
* Kit house.
* Self build and custom housebuilding registers.
* Self-build and Custom Housebuilding Bill 2014-15.
* Self-build home project plan.
* Self-build homes
* Self-build homes negotiating discounts.
* Self-build initiative.
* Serviced plot.
* VAT refunds on self-build homes.

[[Category:Cost_/_business_planning]] [[Category:Procurement]]

User:TenderSpace

2016-04-05T09:07:43Z

TenderSpace:

[https://www.thetenderspace.com/ TenderSpace] is a new digital procurement platform offering a unique suite of web-based tools for those involved in property or construction related businesses. It is aimed at professionals working in the property or construction sector, including clients and advisors, contractors, professionals, suppliers, manufacturers and trades.

TenderSpace connects professionals via its ‘ToolBox’ function which provides a suite of tools to help people connect, analyse and manage workflows and procurement processes in an easier and more efficient way. It is free to subscribe, and there are a range of upgrade options with different pricing structures that enable full use of the site’s tools.

Mike Jeffries, the former chairman and chief executive of Atkins, is the non-executive chairman and in an interview with Construction Manager said: “I have been involved in the construction industry for my entire working career. It is an industry built on trust and relationships but in recent years there has been an increasing need for those involved in the industry to broaden their relationships, in order to keep pace with change, much of which has been driven by technology. Any platform that potentially improves communication and transparency such as TenderSpace can only help businesses work better together. In an industry that thrives on relationships, TenderSpace creates an opportunity to manage existing relationships and develop new ones.”