Construction Companies Lack of Compensation for Completed Projects Adding to a Bigger Problem in SA
According to Master Builders SA, between the period 2014 and 2017, up to 506 construction firms have already faced liquidation due to poor economic times in South Africa. This, of course, includes many corporations, both small and big, that have failed to keep up with their competitors. Considering that there seems to have been a lack of projects made available to sustain some construction firms in the country, the fact that hundreds have been taken out of the game, possibly means something prosperous for those who are still working hard to sustain themselves.
The crash in building work has taken a massive toll on the construction industry, as well as the economy, but besides that, companies are also struggling just as much to get paid for completed work.
With countless invoices submitted, many companies go unpaid for months at a time, and sometimes, don’t get compensated whatsoever, which is also because of the government. Although the government’s contributes to infrastructure projects going uncompensated, there are also general clients who seem to be lacking in the ‘pay on time’ department.
In 2019, Stats SA Data Suggests that Up to 98 Construction Companies are in the Red, and won’t Make it Going Forward
98 Companies going out of business in 2019 alone, poses a massive problem for the construction industry. Basil Read, a business rescue operative company for the construction industry, has reported that there has been an operating loss of up to R733.8 million by 31 December 2017. The companies involved in operating losses has been placed in business rescue since June 2018.
Basil Read now struggles to keep up with loss-making contracts as it has increased significantly, particularly with the last decade presenting extremely dire affairs.
One solution that could aid in the problem at hand, is if contractors could get paid on time. This will surely help address cash-flow issues companies have going forward.
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