Credit risk

Tool launched to help companies assess credit risk in supply chains

A new tool will help construction companies assess credit risk in their supply chains as financial uncertainty continues to plague the sector.

The Business Health Dashboard will provide businesses with information on outstanding debts and payment risk throughout the supply chain. The tool was developed by construction technology company Access Group with credit scoring provider Experian so businesses can make more informed decisions about new and existing customers and suppliers.

Management tool users have access to Access Group’s internal supplier data which can then be compared to Experian’s credit risk data. The dashboard also helps companies identify areas where productivity can be improved, which in turn can reduce risk and increase profit margins.

As the industry faces project delays, a battle for materials and high inflation, construction companies find themselves increasingly vulnerable to the risk of default. This has a ripple effect throughout the supply chain.

Administrations in the sector have been elevated from historical levels, and more companies are expected to fail in the coming months, especially those that are cash-strapped. Creditsafe data provided to Building News showed that a total of 31 companies went bankrupt in February, followed by 24 in March, 22 in April and 11 in May.

Access Group construction manager Carol Massay cited data from restructuring specialists Begbies Traynor, which found that more than 75,000 construction companies could be at risk of bankruptcy.

“Bad debts seem to be a grim reality for subcontractors, who are under enormous pressure to find a replacement and ensure the project doesn’t fall behind when a supplier folds,” Massey said.

She added: “By partnering with Experian, our customers can use its credit risk data to gain a much more detailed understanding of customer and supplier portfolios and we believe this will have a hugely positive impact, not only on the decision-making process. , but also the net result.