A fifth - 20% - of small firms participating in an Association of Consulting Engineers’ survey reported debtors amounting to more than 100 days’ sales.
Large firms are waiting even longer to be paid, averaging 85 days.
With 17% of firms running at a loss, and with margins falling across the sector, the length of time can cause significant problems for companies with limited reserves.
ACE chief executive Nelson Ogunshakin said: “With increasing financial pressures facing client companies in the public and private sectors, small engineering companies are facing significant waits to be paid for the vital work that they do. This can cause significant risks for their business as cash flow proves tight and lending conditions remain difficult.
“We appreciate the government’s commitment on this issue through long-standing measures such as the Fair Payment Charter with maximum 28 days on payment. However, we hope to see the principles behind this adopted more widely across the sector, if we are maintain a sustainable industry.”
Small firms - companies with fewer than 50 staff - also reported an average order book of 4.5 months of work ahead. Large firms reported an average order book of 8.2 months.
Got a story? Email news@theconstructionindex.co.uk
