Reflections from the CICM Half-Year Review 2025
I joined a host of other Construction and Credit Professionals at the Chartered Institute of
Credit Management (CICM)’s Half-Year Review 2025 webinar. Listening to these experts
discuss credit risk, construction contracts and collections, we learn there is much that can be
implemented in our own businesses to minimise risk and maximise cash.
Construction Insolvencies on the Rise. Is a Reversal in Sight?
Construction business insolvencies are up 6.7% on last year, the industry, some would say,
has faced a slight downturn so far this year. With recent government promises ( rumours? )
of a £39 billion investment into social housing, maybe this downturn is about to reverse?
The Growing Complexity of Construction Contracts
Business contracts are becoming more contentious and harder to negotiate, with legal teams
becoming increasingly involved in the process. Retentions are much more commonplace,
with a lot of companies demanding they be set in place before business is done. We also
find the average retention time is frequently stretching past 12 months. Contractual areas
that have always been disputed are the usual rates and terms of trade. We can look to the
example of HS2, where it is a contractual obligation to pay within 30 days. However, for
many reasons this is probably not the norm. Other disputable areas can include price
queries for materials and the quality of said materials along with contractual termination
rights.
Collections – Adapting Strategies in Uncertain Times
As the speakers moved away from contracts and toward collections, the response was
unanimous. More payment plans are being facilitated than ever before, the days of one off
payments appear to be fading fast. With the industry itself becoming more uncertain,
naturally collections are going to be harder, leading to a new approach from the credit
collectors. Increasingly trained in spotting risk signals, combining structure and flexibility is a
key part of the soft skillset collection strategies now being undertaken. ‘People pay people’
one of the panel tells us, so simple but so true. Building and upkeeping that long term
relationship between credit control, customer and depot, shows a bit of empathy and
understanding can go a long way. Trying to prevent overdue payments before they happen
is a lot more likely to succeed with this kind of strategy.
Fraud Risks in the Construction Sector
When looking at credit risk, the 2 most common frauds are long term fraud, setting up a
fraudulent business. Corporate identity fraud is increasingly commonplace, with fraudsters
impersonating other businesses for their own gains. The bottom line here really is vigilance.
If something looks different then investigate it. Much of this kind of fraud is undertaken by
those who have worked in the industry, potentially even for the company they are attempting
to defraud. This kind of insider knowledge makes their activity even harder to detect.
Different guises of invoice fraud, from extending credit terms and amounts, to deepfaking
CEOs on online video calls shows the extremes fraudsters will go to.
Final Thoughts: Stay Vigilant and Connected
@Top Service are the UK’s only credit reference and debt recovery agency to specialise in
the construction industry. Their top advice is to stay vigilant and notify themselves and as
many other companies as possible on construction forums should you discover fraudulent
activity.
Thank you to everyone involved and on the panel for sharing your expertise @EmmaReilly
@PhillipKing @JonathanWard @SimonHowell @LukeSculthorp @JadeOwen
