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Could a lack of finance damage the building industry?

November 29, 2017


The construction industry faces many challenges in the uncertainty of the British economy. Although there are plans for more houses to be built and more recently extra funding announced in the Budget, what does this really mean for the building industry as a whole?


In 2017, the industry faced many challenges including a weak pound, impending Brexit negotiations and a reduction of skilled workers. Although these factors present hurdles for the trade, construction has also seen some of its most productive times in recent years.


There are several factors that a lack of finance could impose on the building industry including:


Funding options and cash flow


Funding and finance options are a constant barrier to the construction industry. With tighter regulation and stricter criteria on lending it could potentially slow progress and affect building production in the long term. These types of issues create problems for day-to-day running of a business and long term resource.


Cash flow and financial injections present an option to progress and expand construction on projects. Some options available to the building industry include development finance and invoice finance, which helps stabalise cash flow and manage future strategy.


Rising resource costs


The rising costs of materials, resources and skilled labour present another knock for the building industry. These increased costs present not only an issue for bottom-line figures but also the ability to invest and expand as a business. External factors such as Brexit have also caused concern about the cost of importing building materials from the EU.


Digital changes in the industry


There have been several technological advancements in the construction industry. Although many companies have found it more difficult to streamline their businesses, investment in new technologies such as Business Information Modelling (BIM) can help improve workflow and processes.


Finance and training for new advancements such as BIM help plan and develop processes from design through to execution whilst delivering useful data at every step of the project.


Relationships with sub-contractors


Developing a good relationship with sub-contractors in the building industry is key to constructing quality projects. As the industry sees tighter budgets and increased resource costs, the pressure to improve margins can impede on the relationship and motivation with your key suppliers.


If cash flow is tight or budgets restricted, seeking professional financial advice can help companies through the leaner times, and may offer an invaluable resource to build and maintain strong supplier relationships.


Project delays and risk management


There is a certain amount of unpredictability in all industries including construction. Budgeting for risks and project delays is an important part of the development process as any surprises may present set backs of a few weeks, to the extreme of halting an entire development.


To prevent high-risk situations, finance solutions such as business and invoice finance could help you overcome any hurdles without affecting the day-today running of the business.


The lack of traditional funding for the construction industry may start to affect the quality and number of developments being built. There are a number of alternative solutions available that enable you to take a proactive step in ensuring the success of a project. Contact us today to find out more.



Find out how Response Business Finance can help with Property Finance. Click here for more info:

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