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‘Keep an eye on cash flow’ warning for construction sector

A construction industry expert is warning of the need to monitor cash flow and insist on timely payments.

The warning follows the recent news that construction giant GB Group Holdings Limited and GB Building Solutions Ltd appointed administrators with a reported 350 job losses.

Ragene Raithatha, solicitor in the Construction team at Napthens solicitors, has said the news highlights the importance for sub-contractors to keep an eye on cash flow and demand timely payments for payment notices issued under construction contracts.

She said: “The news that GB Group Holdings Ltd had collapsed in this way was distressing to hear, and I’m sure there are countless other casualties in the form of sub-contractors who have been left unpaid and financially exposed.

“In the current climate, a creditor asking for time to pay could be indicative of cash flow issues, and should be carefully monitored. The sooner businesses act, the more likely they are to secure payment ahead of other creditors.

“The Housing Grants Construction & Regeneration Act 1996 was introduced to offer protection to those in the construction industry for payment of invoices.

“This Act allows for payment to be made in stages under all construction contracts. If payment is not made, there is the right to claim interest from the final date for payment and the right to suspend works for non-payment.

“Any construction businesses which find themselves in this situation should contact their advisor for support to recover monies due under outstanding invoices/payment notices.”