Choosing a supplier during uncertain times

All the indicators suggest that the UK’s cost of living crisis is deepening with inflation at its highest level since 1992. Inflation looks set to continue to rise and interest rates are set to follow them. As the UK population becomes poorer, there can be little doubt that customer concerns around the financial health of the companies they do business with will also be pulled into sharp focus.

Payment terms for timber frame homes are relatively consistent in the UK (with some variation) with the main bulk of the payment being made in advance of delivery. In Fleming Homes’ case, we require the invoice to be paid in full 14 days before delivery of the timber frame kit.

We do this to protect our customers, our employees, and ultimately our company. Payment in advance mitigates against the risk of loss. It is what has kept us financially healthy since 1986 and allows us to remain so.

With the structural element of your self-build home accounting for approximately a quarter of your total build costs, it is important to undertake due diligence when it comes to choosing a company to manufacture your timber frame. If you have received two or three quotations, there are a number of things you can do to check the financial health of the companies you are exploring working with. (Very low quotation prices might be a warning sign).

The first action you can take is to visit Companies House and download the latest sets of company accounts.

Even with abbreviated accounts you will be able to get a sense of the companies’ financial well-being. If a company’s Balance Sheet has Net Liabilities rather than Net Assets, then this is a potential sign of financial weakness. More detailed accounts will indicate if a company has allocated amounts from its profit and loss account to settlements associated with customer claims (not a good sign!)

You can also get a sense of a company’s liquidity by comparing current assets and current liabilities to satisfy yourself that the company is in a position to meet its financial obligations. A strong cash at bank figure would be a good sign but a low, or no cash at bank figure may cause some issues.

A further measure to give peace of mind is to obtain a business credit report from a credit reporting agency, for example, Dun & Bradstreet, Equifax Business, or Experian Business.

When assessing a company’s financial information, bear in mind that a balance sheet and credit report represent a single snapshot in time, which will most likely be out of date at the time of review. However, this type of due diligence can certainly signpost red flags that will enable you to consider your options with greater insight.

At Fleming Homes, it’s important to us that you feel comfortable doing business with us. You won’t find us the cheapest, but you will find us to be a company that cares passionately about serving our customers above selling to them. And in these uncertain times, you can rely on us being financially strong enough to weather any forthcoming financial storms.