Scottish businesses warned of potential Carillion domino effect

The firm is concerned that many firms which supplied services and goods to Carillion may not receive payments they were due causing financial difficulties in these businesses over the next three to six months and which could, in turn, result in some of the supplier businesses themselves becoming insolvent.

Carillion’s standard payment terms to suppliers was 120 days meaning many creditor firms will be due substantial sums for the period from September 2017 onwards. As it is unknown if any dividend will be paid from the liquidation and how much it will be this could cause considerable financial difficulties for many of these businesses in the short to medium term.

The liquidators’ state that: “all agents, subcontractors and suppliers should continue to work and provide goods and services as normal, under their existing contracts, terms and conditions. You will get paid for goods and services you supply from 15 January 2018.”

While this indicates that there will be work for these companies in the near future there is no mention of funds due prior to 15th January 2018 which could cause a substantial financial headache for businesses relying on that money to pay their own staff and creditors.

Eileen Blackburn