Survival guide issued for sub-contractors
A concerned Irish accountancy firm has issued "a survival guide for sub-contractors" in the wake of last month's Carillion collapse.
Cork firm McAvoy & Associates warned clients "that the ripples" of the UK construction giant "had already spread to Ireland".
Sub-contractors were warned to check carefully that judgments have not been registered against a contractor, to "stay alert throughout the performance of the contract" and to "look out for any change in the behaviour of the main contractor".
"Many firms feel overjoyed whenever they land a contract," it said. "While this is understandable take care not to enter into one without first inspecting the counter party's financial statements and credit reports.
"Has there been a slowdown in the progress of the works? Is there a general decrease in the volume of labour on the site, or is equipment being removed?
"Cash is always king," said the accountant's guide. "Insist on stage payments, and look for an initial payment at the beginning of the contract." The survival guide warned that "the earlier that warning signs can be picked up, the better" to give the sub-contractor a chance of protecting itself "if cash dries up".
Carillion, one of the biggest construction and contracting firms in the world, collapsed owing £900m, with thousands of sub-contractors left without their money. This newspaper reported warnings from industry experts that similar models to Carillion exist in the Irish construction sector. It was reported in Britain last week that almost 400 workers had been made redundant by the huge firm but 18,000 on contracts were in limbo.
"The collapse of Carillion has left small businesses and sub-contractors out of pocket with many left unpaid for months and now facing potential ruin," said Rachel Reeves, the chair of a House of Commons business select committee.
"It's clear that Carillion were notorious late-payers, ruthlessly exploiting their position to bully their contractors in a desperate bid to prop up their precarious business model."
Sunday Indo Business