In the construction sector, subcontractors and vendors play a critical role in completing projects successfully and on time.
However, subcontractor bashing, which refers to the act of publicly criticising or belittling one’s subcontractors or vendors, can have negative consequences for both the project and the business.
This behavior can lead to a breakdown in communication and trust, which can impact the quality of work, lead to delays, and ultimately harm the reputation and bottom line of the business.
In this context, it’s important for construction industry professionals to recognise the negative effects of subcontractor bashing and take steps to ensure positive working relationships with their subcontractors and vendors
What is subbie bashing?
Subbie bashing’ occurs when larger firms financially intimidate smaller subcontractors with whom they operate. Larger corporations frequently know they can get away with it since smaller subcontractors lack the capacity to fight back.
Furthermore, many subcontractors do not believe they can stand up to these large clients because doing so could jeopardise future business from that company.
Ultimately, subby bashing can have a negative impact on the success of your business, and it’s important to treat subcontractors and vendors with respect and professionalism.
These subcontractors are therefore trapped in a loop that they cannot break.
Subbie bashing can take several forms, including:
- payment certificates are undervalued
- withholding retention monies making bogus damages claims
- refusing final payments
- invoking harsh contract terms.
Subbie bashing can swiftly lead to cash flow issues and financial hardship for those who are subjected to it.
According to the Federation of Small Companies, SME late payments force more than 50,000 small firms to close each year. Small firms are owing £80,000 on average, and £6.7 billion was spent last year alone simply trying to collect money that was previously owed.
The government is seeking to assist small firms with late payments. The proposal is to penalise major corporations for failing to pay their small and medium-sized business suppliers.
Furthermore, some of the largest government contractors risk losing public sector contracts if they do not begin paying small firms on schedule.
What can you do if you’ve been affected by subbie bashing?
If you owe more than £750, you can file a winding-up petition to try to get your money back. Taking this way ensures that you have the legal backing to recover the money you are owed. Nonetheless, you should be aware of the following:
- You may not receive the money that you are owed
- there may be additional fees that you must pay (i.e. court fees and a petition deposit).
- If the corporation can afford to refund the costs, you may be able to recover them.
Nevertheless, many small businesses lack the means to pursue this path. For some of them, the upshot of the subbie bashing is significant cashflow problems that prevent them from paying their own creditors (i.e. the people they owe money to).
With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.