Customers squeeze tradesmen to breaking point in recession

  • Anil Kanda
  • 10 Aug, 2009
  • Profits ‘unfairly’ squeezed
  • 42% of tradesmen don’t expect to see the financial year out
  • 78% witness falling customer spend
  • Customers paying 35 days late on average

Struggling tradesmen are finding themselves squeezed by their clients in the recession, as customers are reducing spend, haggling down prices, insisting on tighter payment terms and paying late, new research from business insurance comparator reveals.

The study, Constriction, reveals that as a result many tradesmen do not expect their businesses to survive past the end of this financial year.

Tony Deacon, Chief Executive of, comments:
“In terms of recession, tradesmen are in the eye of the storm. Financially, times have never been tougher and it’s no surprise that the cracks are starting to show.”

Spending less, haggling hard

A massive 80% of tradesmen have witnessed falling spend in the recession.

At the same time, for the work that is commissioned, customers are haggling hard on price, as identified by 70% of tradesmen.

Indeed, nearly all respondents (97%), complain that customers are ‘unfairly’ squeezing their profit margins.

Adding insult to injury, over a third (36%) of tradesmen have experienced an increase in customer complaints.

Paying late

Tradesmen’s cash flows are also being hit by customers paying invoices an average of 35 days late.

Nearly three quarters of tradesmen (64%) fear a rise in customers defaulting entirely on their debt, yet alarmingly over a quarter (26%) are scaling back on performing financial due diligence checks on new clients.

Indeed, 70% of tradesmen cite tougher contractual and payment terms from customers as a critical current risk to their business.

Tradesmen struggling

As a result, more than two fifths (42%) of tradesmen do not expect their businesses to survive past the end of the current financial year if the tough market conditions persist.

  • What added value can be offered
  • Be brave – cut out the customers that create the most work and offer the least return
  • Look into debt management options and cashflow solutions
  • Look for new ways to do business – online lead generation for example (ie.

Cash flow improvement through invoice finance

It may be stating the obvious, but the number one reason for using invoice finance is to generate immediate cash (up to 90% of invoice value) to pay wages, tax bills, suppliers etc.

This means happy employees, discounts from suppliers and, most importantly, a lot less stress for the business owner.

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