I was passed a draft copy of the latest state of trade survey undertaken by the specialist contractors’ body NSCC. It covers the first quarter of this year and tells pretty much the story you’d expect – orders and inquiries down and firms working at lower and lower capacity.

It is, if more proof were needed, further evidence of the pace at which the industry is slipping deeper into recession.

But there were a couple of things that particularly caught my eye.

First was that for the past year and a half worsening late payment has become a major issue, having not really figured before the credit crunch. This has, unsurprisingly, come with increased concerns, which have been mentioned here before, about a rising tide of other contractual abuses.

Yes, payment problems have always been a huge issue for those construction firms positioned in the supply chain further from the ultimate client. But there was a sense that they had stabilised at an albeit uncomfortable level and this does seem to come out in the survey.

The credit crunch, however, has resulted in a tightened of the screw for specialist contractors, to the point where late payment is now seen as the biggest factor affecting their businesses.

I had, perhaps naively, assumed that with some easing in credit of late we might see a slight improvement in payment conditions. And there are some signs in the data that there may be some improvement with the numbers paid within 30 days increasing from 2% to 5% and those paid within 30 to 60 days increasing from 57% to 72%.

This is to be welcomed, although it would be premature to assume too much from one quarter’s figures particularly with there being possible seasonal effects at play.

But, for me at least, more important is that there is a pressing need not only to arrest the worsening state of late payment within the industry, but to reverse the tide.

A very crude estimate I produced last year suggested that trade credit among contractors runs to about £30 billion. That represents a huge amount of risk given the increased likelihood of business failure in the current economic climate.

The second thing that caught my attention within the survey was within the comments. The statement made that “contracts are simply being shelved due to lack of funding” should be taken very seriously.

I have not come across any work done on the conversion rate of orders booked to work undertaken and how this changes as the industry shifts into or out of recession. (If anyone knows of any such work I’d be delighted to hear from you).

But it is not too crazy a leap to make to assume that the rate drops markedly if cash-strapped clients are pulling out of projects. And there is growing evidence that work that firms thought was in the bag is now dropping out.

With new orders drying up, this added hit may well reduce the level of comfort felt by contractors.

The key point here is that firms should be recognising these problems now and planning how to adjust rather than ignoring them and being forced into a knee-jerk reactions later.