The latest data on company insolvencies for January 2025 reveals a continuing trend of high insolvency numbers, despite a slight decrease from the record levels of 2023. The construction industry has been particularly affected, continuing to report the highest number of insolvencies across all sectors. Below is a detailed analysis of the insolvency landscape, with a focus on construction.

Overall Numbers and Trends

There were 1,971 company insolvencies in January 2025, marking a 6% increase from December 2024 (1,852) and an 11% rise compared to January 2024 (1,780). Although insolvencies remain high relative to historical levels, they are slightly lower than in 2023, which saw a 30-year peak.

The breakdown of insolvencies includes:

• 269 compulsory liquidations
• 1,546 creditors’ voluntary liquidations (CVLs)
• 142 administrations
• 14 company voluntary arrangements (CVAs)
• No receivership appointments

The rate of insolvency for the 12 months ending January 2025 was 52.6 per 10,000 companies, indicating that one in 190 companies entered insolvency during this period. 

Construction Industry at the Forefront of Insolvencies

The construction sector has been particularly hard-hit, accounting for 17% of all company insolvencies in 2024, with 4,032 firms going under. A combination of economic pressures and industry-specific challenges have intensified financial strain, leading to a rise in insolvencies. 

Breakdown by Insolvency Type

• Creditors’ Voluntary Liquidations (CVLs): Accounted for 78% of all insolvencies in January 2025. CVLs increased by 9% from December 2024 and were 14% higher than January 2024.
• Compulsory Liquidations: Decreased by 5% from December 2024 and 5% from January 2024.
• Administrations: Increased by 10% from December 2024 and 9% from January 2024.
• Company Voluntary Arrangements (CVAs): Declined by 13% from January 2024 and 18% from December 2024.
• Receivership Appointments: None were recorded in January 2025, continuing the trend of extremely low numbers in recent years.

Moratoriums and Restructuring Plans

Only one moratorium was registered in January 2025, and no restructuring plans were recorded. Since the introduction of these procedures in 2020, a total of 50 moratoriums and 26 restructuring plans have been registered at Companies House.

Conclusion

While the number of company insolvencies remains high, the figures for January 2025 suggest a mixed picture. The decline in compulsory liquidations and continued rise in CVLs reflect ongoing economic challenges. However, the construction sector remains a key area of concern, with persistent financial pressures leading to the highest number of insolvencies across all industries.

Looking ahead, the recent interest rate reduction offers a glimmer of hope for the construction sector, potentially easing financing conditions and improving demand in the housing market. However, the full impact will depend on broader economic trends, inflation levels, and the confidence of investors and developers.

For businesses in construction and beyond, proactive financial management and reacting to early warning signs remain crucial in navigating uncertain economic conditions.

We invite credit management teams across industries to make the most of the tools and services we offer:

Through our up to the minute trading experiences you can actively monitor payment patterns and the financial health of your customers and customer customers to stay ahead of potential issues.

Take advantage of our services to optimise cash flow management and effectively mitigate risks.

For tailored advice on overcoming financial challenges, contact us at 01527 503990.

HMRC interest rates for late payments will be revised following the Bank of England interest rate cut to 4.5%. The Bank of England Monetary Policy Committee announced on 6 February 2025 to reduce the Bank of England base rate to 4.5% from 4.75%.

HMRC interest rates are linked to the Bank of England base rate.

As a consequence of the change in the base rate, HMRC interest rates for late payment and repayment will reduce.

These changes will come into effect on:

• 17 February 2025 for quarterly instalment payments
• 25 February 2025 for non-quarterly instalments payments

You can find further Information on the interest rates for payments here.

How HMRC interest rates are set:

HMRC interest rates are set in legislation and are linked to the Bank of England base rate.

Late payment interest is currently set at base rate plus 2.5%. Repayment interest is set at base rate minus 1%, with a lower limit – or ‘minimum floor’ – of 0.5%.

The differential between late payment interest and repayment interest is in line with the policy of other tax authorities worldwide and compares favourably with commercial practice for interest charged on loans or overdrafts and interest paid on deposits.

The rate of late payment interest encourages prompt payment and ensures fairness for those who pay their tax on time, while the rate of repayment interest fairly compensates taxpayers for loss of use of their money when they overpay.

The Bank of England’s recent decision to cut the base interest rate from 4.75% to 4.5% in February 2025 aims to stimulate economic activity amid concerns over stagnation. This move is expected to have several implications for the UK construction industry.

Positive Impacts:

1. Reduced Borrowing Costs: Lower interest rates can decrease the cost of financing for construction projects, potentially encouraging investment in new developments. This reduction in borrowing costs may make long-term investments in construction more attractive, leading to increased project initiations.
2. Improved Housing Affordability: Decreased interest rates can enhance housing affordability by lowering mortgage rates, which may boost demand for new residential construction. This uptick in demand could incentivise builders to initiate more housing projects.

Challenges and Considerations:

1. Delayed Recovery in Housing Sector: Despite the rate cut, the construction industry, particularly the housing sector, may not experience immediate benefits. The Construction Products Association predicted a 2.9% decline in output for 2024, with recovery anticipated in 2025 as interest rate cuts take fuller effect and consumer confidence strengthens.
2. Persistent Inflation and Material Costs: The Bank of England projects that inflation will temporarily rise to 3.7% in 2025 before returning to the 2% target. Elevated inflation can lead to increased costs for construction materials and labour, potentially offsetting the benefits of lower borrowing costs.
3. Sector-Specific Variations: While commercial and civil engineering projects have shown resilience, the residential construction sector has faced challenges due to previous high borrowing costs and economic uncertainty. The recent rate cut may gradually improve conditions, but a cautious approach from investors and developers could persist in the near term.

In summary, the recent interest rate reduction by the Bank of England is poised to provide some relief to the construction industry by lowering financing costs and potentially stimulating demand. However, the extent of its positive impact will depend on factors such as inflation trends, material costs, and the pace at which consumer and investor confidence recovers.

We had the absolute pleasure of attending the Chartered Institute of Credit Management (CICM) Credit Awards, and what a night it was!

The highlight? Emma Reilly FCICM being awarded Credit Professional of the Year!

A truly well-deserved recognition for Emma’s dedication, expertise, and outstanding contributions to the credit industry. Watch with us as she takes the stage for this incredible achievement! 🎥

Congratulations, Emma! Your hard work and passion continue to inspire us all.

Late payments and bad debt are significant challenges in the construction industry. Spotting high-risk clients early can save your business time, money, and unnecessary stress. This guide provides actionable steps to help you identify potential risks before they become costly problems.

1. Analyse Payment Histories

Understanding a customer’s payment behavior is a critical first step. Look for patterns in how they handle their financial obligations.

• Indicators:
  • A history of late payments to suppliers or subcontractors.
  • Reports of missed or disputed payments in the past.
• Actionable Tip: Use industry-specific credit reference agencies (like ours) to access up-to-date trading experiences and payment trends.

2. Request and Review Credit Reports

A customer’s credit report provides a snapshot of their financial stability and creditworthiness.

• Key Insights to Look For:
  • What other suppliers have experienced. 
  • Declines in financial metrics.
• Actionable Tip: Opt for credit reports tailored to the construction industry, which often include details on trading performance and project histories.

3. Assess Contract Terms and Behavior

How a customer negotiates and adheres to contract terms can reveal much about their reliability.

• Warning Signs:
  • Excessive negotiation on payment terms or requests for extended payment periods.
  • Avoidance of clear, written agreements.
• Actionable Tip: Always insist on written contracts with clear payment terms and penalties for late payments.

4. Monitor for Signs of Financial Distress

Even reliable customers can face unexpected financial challenges. Stay vigilant for warning signs:

• Indicators of Trouble:
  • Delayed responses to invoices or queries.
  • Requests for revised payment schedules or upfront discounts.
  • Reports of legal disputes or insolvency filings.
• Actionable Tip: Regularly monitor all customers and their supply chains using credit monitoring services to identify early signs of financial distress.

5. Check for Disputes or Legal Issues

Ongoing disputes or a history of litigation can indicate deeper issues.

• What to Watch For:
  • Frequent disputes over project deliverables or payments.
  • Court filings or public records of legal actions.
• Actionable Tip: Review publicly available legal records and use industry resources to check for ongoing disputes.

6. Maintain Regular Communication

Building a strong working relationship with customers can help you stay ahead of potential problems.

• Why It Matters:
  • Open communication fosters trust and transparency.
  • Regular check-ins can uncover issues before they escalate.
• Actionable Tip: Schedule periodic reviews to discuss project progress and payment expectations.

Conclusion

Spotting high-risk customers in the construction industry requires vigilance, research, and the right tools. By analysing payment histories, leveraging industry-specific credit data, and monitoring customer behavior, you can significantly reduce your exposure to late payments and bad debts.

Want to learn more about assessing and managing credit risk in the construction industry? Contact us today or read our guide on preventing late payments.

Late payments are a persistent challenge in the construction industry, often causing cash flow issues, project delays, and stress. By implementing proactive measures, you can help to safeguard your business and have a much better opportunity to see more timely payments from your clients. This guide offers practical tips to help you minimise the risk of late payments and maintain a healthy financial flow.

1. Set Clear Payment Terms

Establishing clear and fair payment terms upfront is essential for avoiding misunderstandings and disputes.

    • What to Include:

        ◦ Payment due dates (e.g., 30 days from invoice date).

        ◦ Penalties for late payments.

        ◦ Accepted payment methods.

    • Pro Tip: Ensure all terms are documented in contracts and signed by all parties before work begins.

2. Perform Credit Checks on New Customers

Understanding your customers’ financial health and payment behaviours experienced by other suppliers will help you assess their reliability.

    • Key Steps:

        ◦ research the best credit information provider for you and business. 

        ◦ Don’t underestimate the ‘gut feeling’ your knowledge and experience gives you. 

    • Pro Tip: Consider information sharing platforms to leverage industry knowledge & experience. 

3. Invoice Promptly and Accurately

Late or inaccurate invoices are common reasons for delayed payments. Ensure your invoicing process is efficient and error-free.

    • Best Practices:

        ◦ Send invoices as soon as milestones are completed.

        ◦ Double-check that all details (e.g., amounts, client information, project references) are correct.

        ◦ Include payment terms prominently on the invoice.

    • Pro Tip: Review your order to cash process to ensure it is efficient and effective

4. Leverage Real-Time Trading Information

Staying informed about a client’s payment behavior helps you identify potential risks early.

    • Benefits of Real-Time Data:

        ◦ Spot trends in payment delays.

        ◦ Identify clients struggling to meet obligations.

 Understand and keep track of your customers, key customers. .

    • Pro Tip: Monitor all clients and their supply chains regularly for changes in their financial standing.

    5. Maintain Open Communication

Strong relationships and clear communication with your clients can prevent misunderstandings and build trust.

    • How to Foster Communication:

        ◦ Regularly update clients on project progress and invoicing.

        ◦ Address payment delays diplomatically but firmly.

    • Pro Tip: Schedule periodic check-ins to discuss ongoing projects and payment expectations.

6. Enforce Penalties for Late Payments (Or At Least Use What You’re Entitled To As A Negotiation Tool)

While incentives can encourage early payment, penalties can deter late payments.

    • Effective Penalty Policies:

        ◦ Charge interest on overdue amounts (in line with the Statutory late payment legislation).

        ◦ Enforce administrative fees for repeated late payments.

    • Pro Tip: Clearly outline penalties in your contracts and ensure clients understand the consequences of late payments.

7. Partner with a Debt Recovery Specialist

If late payments persist, professional support can help you recover funds without damaging client relationships.

    • Benefits of Professional Debt Recovery:

        ◦ Expertise in handling sensitive payment disputes.

        ◦ Higher recovery rates with minimal disruption.

    • Pro Tip: Choose a specialist (Like Us) with experience in the construction industry for tailored solutions.

Conclusion

Preventing late payments in the construction industry requires a combination of proactive strategies, clear communication, and reliable tools. By implementing these tips, you can reduce financial risks, protect your cash flow, and focus on delivering outstanding projects.

Need help managing credit risks or recovering overdue payments? Contact us today to learn more about our industry-specific solutions.

Every business wants to get paid on time, but turning that goal into reality can be challenging. That’s where we can help.

Watch our latest video featuring Lauren Woolley and our Non-Executive Director Philip King FCICM for expert advice on keeping cash flow healthy and reducing overdue invoices.

Here’s a sneak peek at what you’ll learn:

• How agreeing payment terms upfront makes a big difference.
• Why accurate invoicing to the right contact is critical.
• The power of prompt follow-ups to avoid unnecessary delays.

Key Takeaways from the Video:

• Act early: Don’t wait until the payment is overdue to start chasing.
• Follow up professionally: Polite, consistent communication builds trust and ensures you’re taken seriously.
• Escalate quickly if ignored: Use tools like Top Service reminders, notices, or debt recovery services to avoid prolonged delays.

Did you know?
You can claim statutory late payment interest and charges on overdue invoices—even for invoices paid late within the last six years. This could significantly boost your recovered amounts!

Don’t miss out on these practical tips— watch the video now and give your cash collections a head start in 2025!

As we kick off 2025, we know it’s not always the easiest time of year for businesses. With slower payments and the knock-on effects of recent industry challenges, staying on top of cash flow is more important than ever. In this video, our CEO, Emma shares some helpful tips to support you and your teams, from refreshing policies to making the most of your Top Service membership tools. We’re here to help you navigate these challenges together, and we’re excited to continue to work with you to make 2025 a great year!

The UK construction industry, a key sector often impacted by economic shifts, faced unique insolvency challenges in 2024. Construction consistently records one of the highest insolvency rates among industries due to factors like project delays, cost inflation, and reliance on credit.

2024 Highlights for Construction Insolvencies:

1. Volume of Insolvencies: The construction sector accounted for approximately 18% of all company insolvencies in 2024, aligning with historical trends where it remains one of the most affected industries.
2. Dominance of CVLs: Most construction insolvencies were driven by CVLs, reflecting the financial pressures faced by smaller firms and subcontractors.
3. Factors Driving Insolvency:
   • Cost inflation for materials and labour, exacerbating cash flow challenges.
   • Delayed payments from contractors and developers.
   • A slowdown in housing starts and large infrastructure projects due to broader economic uncertainties.

Comparative Insights:

• The construction industry’s insolvency rate exceeded the national average, emphasizing the sector’s vulnerability.
• Unlike other sectors, where CVLs declined significantly year-on-year, construction CVLs showed a more modest reduction, suggesting continued financial strain.

Looking Ahead: While broader insolvency trends show signs of stabilisation, the construction industry remains exposed to ongoing risks, including potential interest rate fluctuations, regulatory changes, and shifting demand patterns. Firms may need to adopt stronger risk management and financial planning strategies to weather future challenges.

Conclusion

Insolvency trends in 2024 highlight a mixed picture for the UK economy. While total insolvencies decreased by 5% from 2023, certain procedures like compulsory liquidations and CVAs saw notable increases. The construction industry, in particular, continues to face significant pressures, underscoring the need for tailored support and proactive measures to mitigate insolvency risks.

As we move into 2025, monitoring sector-specific dynamics and broader economic trends will be essential for understanding and addressing insolvency challenges across the UK.

Annual Overview for 2024

In 2024, there were 23,872 registered company insolvencies, a 5% decline compared to 2023, which had recorded the highest number of insolvencies since 1993. The breakdown of 2024 insolvencies is as follows:

• 18,840 CVLs (79% of total insolvencies),
• 3,230 compulsory liquidations (14%),
• 1,597 administrations (7%),
• 202 CVAs (less than 1%), and
• 3 receivership appointments.

Annual Highlights:

1. Decline in CVLs: CVLs dropped by 8% from their record-high levels in 2023. However, they remained the dominant form of insolvency.
2. Surge in compulsory liquidations: These rose by 14% year-on-year to their highest level since 2014, reflecting increased creditor enforcement actions.
3. Increases in administrations and CVAs: Administrations were up 2%, while CVAs rose 9%, albeit remaining below pre-pandemic averages.
4. Insolvency rate: The insolvency rate in 2024 was 52.4 per 10,000 companies, a decrease from 57.2 per 10,000 in 2023, reflecting the growing number of registered companies.

Despite the decline in total insolvencies, 2024’s figures remain significantly higher than pre-pandemic levels, indicating ongoing economic pressures.