Late payment to construction firms is the leading issue stifling the industry’s growth, according to a new report by Bibby Financial Services (BFS).

The Planning for Growth report – produced in conjunction with construction specialists The Vinden Partnership (TVP) – saw 53% of SMEs citing the issue as a key challenge. It also reveals a lack of skilled workers and red tape as the main issues currently threatening businesses in the UK.

Helen Wheeler, managing director of construction finance at BFS, said: “Issues associated with late payment continue to hinder the growth of thousands of small construction businesses every year, despite government efforts to improve the situation. This has a huge impact throughout the entire supply-chain and will undoubtedly affect the performance of the construction sector this year.

“Our research shows that firms are facing other significant issues such as increasing red-tape and skills shortages, so there are substantial barriers for subcontractors and small construction firms to overcome in 2015.”

According to the report, government measures established – including the Prompt Payment Code introduced in 2008 and the Construction Supply Chain Payment Charter announced last April – have not yet eased the woes of many small businesses.

47% of construction firms see a shortage of skilled workers as one of the biggest threats to their business, with 39% citing increasing levels of red tape as a serious concern.

Wheeler added: “There are opportunities available in the construction sector but many firms are unable to take on work due to a lack of working capital. Late payment causes significant cashflow issues and exposes businesses to risks brought about by the inability to pay suppliers and workers.”