Construction and Manufacturing Businesses Carrying Heavy Debt, Survey Shows

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30th July 2014 15:49 - Construction

According to a recent survey, the average small to medium-sized construction business carried a trade debt of £484,000 last year.

Of the 550 small to medium businesses included, companies with 10 to 49 staff and a turnover between £2 million and £10 million came out worst off, with an average debt of £627,000 – which equates to around one sixth (16%) of turnover.

Firms with less than 10 employees and revenue of £2 million or less fared better with an average trade debt of £41,000 – which accounts for 14% of turnover.

Medium-sized companies turning over between £10 million and £100 million though, displayed the highest level of trade debt. Employing between 50 and 249 staff, medium businesses incurred, on average, £969,000 of trade debt last year – 13% of their turnover.

Small to medium manufacturing enterprises were hit hard too, carrying debts of £1.8 million during the last financial year – 38% higher than the national average (£1.3 million).

Micro-SMEs sustained £73,000 worth of debt – accounting for 16% of turnover, while small firms (10 to 49 employees) incurred an average trade debt of £1 million – making up 18% of their £2 million to £10 million revenue range.

Medium-sized manufacturing companies carried the highest level of debt - £3.7 million, however, due to their vast income margins (£10 million to £100 million), this accounted for a relatively small proportion (15%) of their turnover.

Late payment is thought to be a major factor contributing to the industry’s financial struggles. On average, it took small to medium-sized manufacturing firms 44 days to receive payment from customers – 14 days more than the typical timeframe (30 days).

Carrying an average debt of £2 million each, manufacturing businesses in the North West, Yorkshire and East Midlands were the hardest hit.

The research in this insight was conducted by Debt Guard Solicitors.

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