Yorkshire construction firms are being urged to brace themselves against payment freezes by ensuring watertight documentation for all site project work.
Jonathan Amor, Restructuring and Insolvency Partner at Azets in Yorkshire, said: “We are starting to see the tell-tale signs of recession in this industry – it happened in the last one and the one before that.
“The problems are manifold but broadly relate to poorly documented contractual arrangements leading to situations where there is wriggle room for clients to delay payments or there are contractual disputes.
“In turn, cash dries up for the construction firms – even well-run ones with strong order books are not immune.
“If there is no money coming in, staff, contractors and suppliers don’t get paid and the banks or private investors get the jitters because overdrafts are breached. That’s when the rug is pulled, with entire supply chains impacted.”
Record-high fuel costs, and VAT tax increases for red diesel, have further compounded problems, Jonathan added.