We’re all aware of the scale of ISG’s failure in October, with the statement of affairs revealing only around £34 million can be recovered against over £1.1 billion of debt. Whilst this will send shockwaves through the industry, construction must also be aware that there was also £600m of bad debt added from the rest of the industry.
This paints a picture of the distress felt throughout an overtaxed and financially exhausted industry, which is in no position to weather the economic shock of one of its largest members failing.
The £600m of bad debt was made up of 383 company failures across the entire industry, with general building/building management, building completion services and electricians/electrical installation companies being particularly badly affected. Giving an average bad debt per company of over £1.5m
Alongside ISG, this puts the number of companies having to absorb a bad debt from these failures well in the thousands; the majority of whom will be construction companies themselves.
It is expected that the extent of the damage caused this month will only be seen in Q1 and early Q2 2025, as directors return from the traditional Christmas slowdown period and assess if they have the pipeline and liquidity to survive the year to come and impending labour cost rises.
At Red Flag Alert, we are proud to work closely with many companies the construction idustry to supply them with out market leading insights and innovative tools they need to navigate the difficult economic landscape.
To see how we will help your business move from just surviving to thriving, speak to one of our consruction industry specialists.
In a volatile market, financial due diligence in the construction industry is critical to avoiding risk and preventing bad debt. Red Flag Alert can help
The threats posed by money laundering are increasingly complex. You need a risk-based approach from Red Flag Alert to properly protect your organisation.
For our quickest response simply call us on 0330 460 9877 and speak to an expert now!