The latest research carried out by the Federation of Master Builders has revealed that three quarters of construction SMEs have said that cowboy clients are having a negative impact on their business. Cowboy clients are thought to be clients who either delay or withhold payment without good reason or making completely unreasonable demands on the company.
The Federation of Master Builders, FMB has carried out UK-wide research into the impact of cowboy clients. The results of this research include that nearly three quarters of SMEs feel that cowboy clients are a serious problem for their business, with nearly a quarter of respondents saying that they have had to wait for more than four months for payment from a client or a large contractor. The FMB’s research has shown that less than a third of the SMEs involved in the research are always paid within the standard 30 days.
This delay to payment and other cowboy behaviours has led to the construction companies having to delay payment to suppliers and having to borrow additional funds from a bank or another lender. 5% of SMEs said that cowboy clients led to the company having to withhold wages and salaries from staff, with 4% having to let staff go due to delays in payment. More damaging to the construction industry as a whole, 20% of SMEs have said that cowboy clients have stopped them having the confidence to grow their business, and 8% almost went out of business.
There are a number of horror stories connected to cowboy builders that is having a negative impact on the reputation of the industry. However, the research generated by the FMB has shown that there is a flip side to these horror stories and can restrict smaller construction companies. Behaviours of cowboy clients include demanding the completion of works additional to the brief or with no extra payment. The most damaging actions is the withholding of payment on spurious grounds such as discovering made up faults.