And accountants are warning that hundreds of contractors are vulnerable this year as construction continues to be the sector hardest hit by insolvencies.
Analysis from PwC shows that 565 construction companies were made insolvent last year from a total of 15,894 across all industries.
Mike Jervis, partner in the business recovery services practice at PwC, said “The demise of Rok in November 2010 exemplifies that companies within the construction and service industries are still vulnerable.
“It is telling that overall construction insolvencies during 2010 were still 15% above those experienced in 2008. A modest increase in interest rates would also put additional pressure on many struggling companies.
“These actual and potential economic challenges need to be factored into company cashflow forecasts and scenario planning should be a key discipline.
“Key risks are loss of demand or increases in uncontrollable costs. Cashflow management needs to be obsessive in companies facing these issues. ”