With the current construction boom across the country, it’s never been more important for major project owners to do their due diligence on supplier’s financial situation.
According to CreditSource founder and CEO Shavantha Mallawa the traditional approach of waiting five to seven days for a report on a potential contractor’s financial risks is imperfect.
“When it comes to key projects, every moment counts,” Shanvantha said, adding that 95 percent of CreditSource assessments are delivered within two business days.
Industry Capability Network (ICN) are experienced industry procurement and supply chain specialists who connect Australian and New Zealand businesses to projects large and small. They are constantly expanding their offering with the goal of making it easier for companies to showcase their capabilities and win contracts, backed by a team of Industry Specialists skilled in assisting companies improve their supply chain and find competitive suppliers.
To this end, ICN has partnered with CreditSource to help project owners choose contractors with financial capability to see projects through to completion.
CreditSource analyses companies in more than 80 different industries, with strong focus on contractors to help businesses minimise risk with major construction projects.
“Our analysis of financial statements, encompassing nearly 25,000 private companies annually, sheds light on the ground-level struggles faced by Australian firms,” Shavantha said.
“While some have weathered the recent storms more adeptly than others, the data forewarns that many companies are battling significant financial distress. “
He said recent data from the Australian Bureau of Statistics revealed a robust surge, with the industry’s total value hitting $59.01 billion as of June 2023.
“However, the joy of this uptick is tempered by the looming threat of a 2.6% contraction in 2023, a consequence of inflation and the spectre of rising interest rates.”
Global inflation, international conflicts, El Niño weather patterns and the increasing costs of material have all affected Australian industry, particularly the construction sector.
Theses factors have seen a number of insolvencies and left many small businesses in the red.
But it’s not all “gloom and doom’”.
“There are success stories amidst the challenges,” he said.
“The data suggests that, despite the industry’s trials, numerous contractors have adeptly managed their circumstances and continue not only to survive but thrive.”
The challenge for project owners is to tap into these successful businesses.
There are also promising signs on the horizon.
“Forecasts predict a 3% annual growth from 2025 to 2027, propelled by the government’s robust commitment to infrastructure development,” Shanvatha said.
“The Federal Budget earmarks $120 billion for an infrastructure project pipeline, with an additional $15.5 billion dedicated to state projects, underscoring a steadfast commitment to industry revitalization.
“While signs of a rebound are emerging, the scars from the past three years run deep, with some companies unlikely to survive.
“This poses a real threat to major project owners, necessitating careful assessment of their financial health to ensure the successful completion of projects. As the industry treads cautiously into the future, a delicate balance between optimism and pragmatism will be key to navigating the complexities that lie ahead.”
For more information on how ICN and CreditSource can help your business go to https://gateway.icn.org.au/creditsource.
