In Victoria last financial year 2,862 companies became insolvent and nationally 27 per cent of all insolvencies were in the construction industry which was almost double the next highest industry.
This figure is only rising, with 328 building sector insolvencies in the month of July this year alone. The year construction has a long history of business failures and phoenixing.
With rising costs of materials, wage rises, costs of living, delays and fixed price contracts, subcontractors are putting themselves at risk everyday not knowing who they are doing business with. As a sub-contractor how can you protect your business?
Stable partnership
The most important step is to manage the risk and to do what you need to understand the risk. Do your due diligence, know who you are dealing with. Understanding a businesses financial health such as outstanding debts and court proceedings may impose potential risk for your cash flow. It could also strengthen your relationship with that business if they have a strong credit history meaning timely payments and smoother transactions for your business. It is important especially with larger contracts that subcontractors get key business intelligence on who they are working for.
The MPA, in partnership with MGA Insurance and Austbrokers, have developed a new business intelligence product for Painters – the Contractor Report. These reports provide a visibility of court actions and insolvency notices, ATO reportable tax debts, reporting of company roles and director relationships with other companies and confirm the details of the organisation you are dealing with and are getting paid.
In construction nothing guarantees getting paid, however this report can provide more clarity on who you are dealing with and if there are details you really need to know.
Get the support and advice you need by joining the Master Painters Association of Victoria/Tasmania. For more information, please contact the Master Painters Association on 03 9813 5922 or email us at mail@mpav.com.au