Suppliers' debt collection and contractor creditworthiness evaluation

Abstract

Results of a survey of UK construction materials suppliers' credit control and debt collection procedures are presented. Analyses of respondent data identified methods and trends associated with: contractor creditworthiness evaluation; suppliers' debt collection methods; and the efficiency, or otherwise, of these techniques. Trend observation highlighted a number of results, including: the minimal resources allocated to debtor evaluation; the ‘questionable’ methods used for establishing credit limits; and the minimal use of insurance and/or factoring for protection against bad debt. A number of questions emanate from these results concerning the efficacy of current practices and the need for future research into contractor creditworthiness evaluation. The paper reinforces that construction contractor creditworthiness evaluation and debt collection procedures have received minimal research to date and, that this situation requires addressing.