Construction firms paying their bills earlier the latest indicator of U.S. industry’s strength

Updated Oct 17, 2015

House home construction site prep

Calling the findings evidence of a clear “upswing” in the U.S. construction industry, a U.K.-based credit reporting agency says American construction firms are, on average, paying their bills earlier than they were last time.

According to a report from the Wall Street Journal, Creditsafe Inc. assessed roughly 1.7 million U.S. construction firms and found that they are paying their bills 9.5 days past their due date, two days earlier than the assessment found one year ago.

Creditsafe says late payments are common when conducting an average of contractors due to the harsh weather, material and labor shortages that impact construction. But with an improvement to that average of two full days, the company’s marketing director David Knowles says there’s much reason for optimism.

“People are starting to pay their bills more promptly, which is an indicator of healthy cash flow,” he told the WSJ. â€śNext year, we’d hope to see these trends continue, and we’d hope this is a strong indicator of a healthy American economy.”

Creditsafe’s findings are only the latest indicator of improvement for the U.S. construction industry. Employment in the industry is at a more than six-year high following six consecutive months of job gains, and spending is at a seven-year high. The lion’s share of credit for the gains can be attributed to the strong performance of the housing market with single-family home starts up 16.6 percent year-over-year, as of August.

The Creditsafe study also found that the number of American firms considered “high credit risks” has dropped by 5.8 percent to roughly 250,000. Meanwhile, the number of “low risk” firms increased by 1.7 percent to roughly 1 million.

And though the study found that the total number of U.S. construction firms in business has dropped by 2.3 percent since last year, Creditsafe says it’s a sign of strength.

“It means that those that were hanging on have tipped off,” Knowles said. “So the health of the herd is improved.”