It takes a multitude of people to work end-to-end on a construction project. If you own or run a construction company of any kind, your employees or contractors need to be paid and you need to be paid by the client to pay these contractors.
When there is a delay or complete breakdown in this daisy-chain of payments, construction projects can be thrown into disarray with the potential for further losses mounting up.
There is an array of different businesses that play a part in the construction process. Almost all projects require some form of contractor or subcontractor.
Construction companies can be anything from real estate developers, architects or design firms, equipment lessors, material suppliers, contractors, engineering firms and more. There will also be ‘boots on the ground’ types, which include civil engineers, trades people, site managers and quantity surveyors.
In short, there are many people who need to be paid before, during and after the construction process. The construction industry is rife with delayed payments and illegal phoenixing activity. In this article, we cover why, as a construction company, it’s important to generate a company credit report and check the business credit for entity involved in the construction process.
Importance of credit checks for construction companies
With so many stakeholders involved in the process, it is crucial to perform a credit report to ensure those who claim to have money, actually do. The payment chain from developers, project owners, construction managers, subcontractors, material suppliers, equipment lessors and more need to have transparency in their financial health to ensure the project runs smoothly.
A lack of transparency in the payment chain can cause delayed payments. The construction industry is notorious for late payments. It’s important to run business credit reports on your clients, your suppliers and contractors to ensure you minimise your exposure to late paying businesses and indeed those that don’t pay at all.
Running a Business Credit Report through CreditorWatch can provide you with all the information you require to manage credit risk. A business credit check should be conducted on all entities you trade with including even suppliers and contractors you have long-standing relationships with.
Utilising vast amounts of data, our company credit reports reveals high risk indicators about businesses such as payment defaults, any record of debt collection, administration appointments, court actions and ASIC action against it.
Through continually gathered data, this accurate risk assessment also provides you with cross directorships and phoenix activity to reveal whether a business or person you are doing business with has had a previously bankrupt enterprise. Performing a business credit check is a good way to understand its payment reliability.
Beyond credit checks: How to power up your due diligence
As a construction company, it is crucial to ensure you’re practising your due diligence to safeguard your company and your employees.
The construction process can be a long one – sometimes lasting years. Many things can be altered in the development of a project, including the financial health of the businesses involved. Staying on top of these changes can make or break a project.
With CreditorWatch’s Monitoring and Alerts, you will be notified through real time alerts when any adverse changes occur to these parties. Even if a credit report comes up with clean bill of health, this can change at any given moment. With 24/7 monitoring, CreditorWatch alerts you if a debtor is taken to court, stops paying other suppliers or goes into administration, for example.
Add extra protection through a UBO report (Ultimate Beneficial Owner’s Report). This is an efficient way to identify the beneficial owners and to comply with AUSTRAC regulations. CreditorWatch’s sophisticated software scans ASIC reports to calculate ownership percentages. This is given to you in a PDF format for ease of reading and provides you with identification of non-individual customers and any risk posed by the beneficial owners of your customers.
A CreditorWatch Financial Risk Assessment is the ideal tool for larger contracts. Tailored to your needs and providing you with expert insights, this feature ensures any people or companies you work with are reputable and reliable. The assessment saves you time and money by making it simple to compare entities, while assisting you in making high-value financial decisions.
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CreditorWatch’s extensive and exclusive data helps you improve your due diligence and make smarter decisions about who to work with. Contact our talented team to understand more on why it’s crucial to your construction company to stay on top of the finance of those you’re working with.
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