Is a cashflow crisis looming?

The glass and glazing industry could face a cashflow crisis over the next few months, according to Insight Data’s CEO Andrew Scott.

“As an industry we’ve been focused on managing supply chain issues and employment headaches caused by the pandemic and Brexit, and managing customer expectations in extremely difficult circumstances,” he said.

“But it may be time to go back to the fundamentals of business and cashflow management as we approach Christmas and new year.”

Andrew revealed the latest industry facts and figures and results of an installer survey during the recent Glazing Summit conference.

“The data shows consolidation with the number of installers and PVCU fabricators declining,” he said. “This can be good news. With less competition, companies are winning more business but there are some underlying issues that could create some real problems over the next few months.”

Andrew told delegates at the Glazing Summit how installers had large order books and many were fitting jobs now that were sold four or five months ago (or longer).

“There are two problems here,” he said. “Firstly, many of the jobs being fitted now or over the next couple of months were sold before suppliers implemented a string of price increases. It means jobs could be fitted at drastically reduced margins or even at a loss in some cases.

“Secondly, many installers have amassed huge order books where homeowners have paid large deposits months ago, providing a significant and artificial cashflow bonanza which in some cases has been used to prop-up the business, mitigate margin erosion, or fund larger stock levels and work-in-progress.”

Andrew says now is the time to re-visit cashflow forecasts and budgets and take prudent business steps.

“The industry has never faced a situation like this, and we all know how quickly cashflow can swing, especially after a few weeks of Christmas/new year slow-down or bad winter weather.

“Installers don’t have the option of factoring or invoice discounting, so planning ahead now could avoid a potential disaster, especially as suppliers are less likely to be flexible.”

Insight Data tracks the activities of over 15,000 companies across the fenestration sector.

This is an extract from the full Insight Data Report 2021, which will be available soon.