Construction cash flows mostly unaffected by COVID-19, but car industry having issues

Despite the generally adverse impact of COVID-19 on the economy, most of the local construction industry has not been affected by the pandemic, a survey indicates.

The survey, conducted by the Malta Association of Credit Management, shows that 55% of respondents from the building and construction industry experienced no negative impacts from COVID-19 on their cash collection and cash flow to date.

Only 45% said payments from their customers were taking longer than usual during the current crisis, with a resulting negative impact on cash flow.

Although many economic sectors were froced to grind to a halt in the past months in a bid to curb the spread of the pandemic, construction has continued mostly unabated.

The survey, published on Friday, was carried out amongst MAMC members in the construction industry between 8 and 12 May 2020.

When it came to cash collection, MACM participants said that only 36% of customers reacted negatively when they were asked to pay their dues.

For 64% of their customers, their paying attitude was one of "business as usual."

In terms of coronavirus government aid, just 36% of respondents applied for financial assistance to help with their cash flow and working capital management. 

The rest did not apply for aid, or do not intent to do so, either because: they are not facing cash flow challenges; or they do not qualify for help, or they have decided to use their own capital.

Automotive industry facing cash flow problems

In contrast with the construction sector, Malta's automotive industry has experienced cash flow problems due to COVID-19, another MACM survey conducted between 6 and 12 May shows.

The automotive survey indicates that customer payments for 80% of respondents were taking longer than usual during crisis, and this was having a negative impact on their cash flow. 

Only 20% said the pandemic has had no effect on their cash collection and cash flow.

Forty percent of respondents said they had offered incentives to pay their dues, in the form of moratoria, discounts and extended credit terms.

Half of respondents said they applied for government COVID-19 financial assistance, while 20% of those who did not apply are still considering tapping into aid funds in the future.

The vast majority - 80% - of respondents said they had not taken any particular action against late-paying or non-paying customers.