The collapse of construction service giant Carillion Plc, the second largest construction business in the UK, has sent shockwaves throughout the sector. From a reported revenue of £5.2 billion in 2016, the once mighty business collapsed into compulsory liquidation on 15th of January 2018.
This is terrible news for Carillion’s 20,000 direct employees in the UK, as well as its hundreds of clients across the construction, civil engineering and facilities management sectors. The insolvency is also likely to have a big impact on Carillion’s UK sub-contractors, estimated to include 30,000 SMEs.
Response To The Crisis
So far, British banks and the UK government have taken the crisis seriously. Led by Lloyds TSB, who announced a £50 million emergency fund on 17th January, UK banks have made £225 million available to support SMEs through short-term business loans, and the government have established a Carillion collapse task force to ensure the company’s outstanding liabilities are paid. The task force includes representatives of ministers, unions and business groups, whose job is to control the spread of damage throughout the construction sector.
Potential Fallout For SMEs
Nevertheless, the knock-on effects for the 30,000 small firms used as sub-contractors are likely to be severe, especially for those with outstanding unpaid invoices. The legal position of suppliers is currently uncertain, with no guarantee that outstanding balances will be paid.
The cash flow impact on Carillion’s suppliers is worsened by the 120 day credit terms imposed on many sub-contractors. For the small businesses concerned, there is likely to be a substantial shortfall in cash flow to meet ongoing liabilities, such as staff wages and taxes.
Even this week, we have heard that some suppliers are already having to make redundancies. Some are at risk of becoming insolvent.
Are You Affected? Act Now!
If you are among the businesses affected by the Carillion crisis, you should act fast to assess the potential impact and take the appropriate measures. Acting quickly and securing professional advice gives you the best possible chance of riding through the crisis with your business intact.
FREE Support Available: Call BCR Today
We are offering a free initial consultation to all Carillion suppliers and other contractors concerned about their future following the collapse. Call us in confidence and we will look at your individual circumstances, giving advice on what action to take and the options available to you. Call our national helpline today on 0333 014 3454, or visit our website to locate your local office.