SA builder collapses, including Coast to Coast Homes, trigger cover warning

Million in insurance claims will be paid out after a series of construction companies collapsed in SA this year — one company on Friday has so far trigged about $1m in claims.

• Major SA home builder Coast to Coast collapses
• OAS Group failure leaves projects in limbo
• GJ Gardner Homes Onkaparinga, Tudor Homes go under
• Unique Urban ceases trading

A string of SA building industry collapses this year will result in millions being paid out in insurance claims with more suppliers being urged to take appropriate trade cover.

The collapse of Coast to Coast Homes last week has so far triggered claims of about $1 million, the collapse of residential builder OAS Group about $400,000 and that of Unique Urban Built about $650,000, SA-based national trade credit insurance provider NCI said.

A property built by Coast to Coast Homes.

Coast to Coast became the seventh SA home builder in less than a year to collapse and could be among the biggest in recent years, with Treasurer Rob Lucas considering further reforms to strengthen the building industry.

“Definitely in SA we are seeing more building and construction failures while the retail sector is also under pressure,” NCI managing director Kirk Cheesman said.

“These are the industries where we are seeing recurring claims.

“More importantly though, this quarter, we have seen a big jump in collections claims, indicating there is a lack of patience around unpaid debts,” he said.

“Suppliers have a lot of pressure on cash flow themselves and what we are seeing is a whole domino effect.”

The number of overdue debts experienced by Australian businesses has reached a record level, according to the latest NCI Trade Credit Risk Index.

Unique Urban Built won the 2015 Master Builder’s building excellence award in the Civil/Engineering Construction category for the Adelaide Aquatice Centre upgrade.

As the nation’s leading forecaster of future company insolvencies, the NCI Trade Credit Risk Index for the first quarter of 2019 reveals there were 5,718 overdue debts across the country between January and March — the highest number recorded since the Index began in 2012.

The index also showed a record 881 collection actions lodged between January and March this year.

“In this climate, suppliers need to ensure they have an insurance policy for the services or products that they are supplying on credit.

“Most small business owners don’t think it’s necessary. But with a 90 per cent payback and the policy also supporting collections action, why wouldn’t you ensure your invoice has the same safety cover that you provide to your mortgage or house or car,” he said.

“With Coast to Coast, we will be paying out about a million dollars to roofing experts, plumbers and flooring suppliers who have pre-empted the risk and taken appropriate measures to safeguard themselves.”

“The increase in delayed payments from suppliers and customers to businesses is concerning.”

“It’s been tougher to collect money this quarter, so the risk of non-payment continues to rise in line with the higher proportion of overdue debts.

“Historically, as these indicators rise, so too does insolvency activity, so Australian businesses could be in for a bumpy ride in 2019.”

Established in 1985, NCI is Australia’s leading trade credit insurance broker with 3500 clients across the country and in NZ and employs about 100 staff in SA.