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.

December 2024 Insights

In December 2024, registered company insolvencies reached 1,838, marking a 6% decrease from November 2024 but a 14% drop compared to December 2023. The composition of insolvencies in November included:

• 273 compulsory liquidations (up from November 2024),
• 1,421 creditors’ voluntary liquidations (CVLs),
• 127 administrations, and
• 17 company voluntary arrangements (CVAs).

Key Trends:

1. Compulsory liquidations showed an increase, continuing a broader trend in 2024 of rising use of this mechanism.
2. CVLs, while remaining the most prevalent insolvency type, experienced a slight decline compared to November.
3. Administrations and CVAs remained relatively steady, with a marginal increase in CVAs from November.

This monthly snapshot reflects a stabilising insolvency landscape following heightened activity in 2023, though certain procedures like compulsory liquidations are seeing a resurgence.

In November 2024, company insolvencies increased by 13% compared to October 2024 and were 12% lower than November 2023. The construction sector remains the most affected, accounting for 17% of all insolvencies in the past year. Below, we explore the updated figures and the factors shaping these trends.

November 2024 Breakdown

• Total Insolvencies: 1,966 cases (compared to 1,743 in October 2024).

Creditors’ Voluntary Liquidations (CVLs):

• 1,565 cases, up 8% from October, making up 80% of all insolvencies.
  CVLs continue to dominate as businesses struggle with financial pressures and an inability to restructure or secure funding.

Compulsory Liquidations:

• 254 cases, up 37% from October.
  This sharp increase reflects intensified enforcement of debts and a growing inability for businesses to repay creditors.

Administrations:

• 132 cases, up 36% from October and 12% higher from November 2023.
  

Company Voluntary Arrangements (CVAs):

• 14 cases, up 17% from October, showing slight improvement in restructuring efforts.

Insolvency Rates & Long-Term Trends

• 12-Month Insolvency Rate: 52.9 per 10,000 companies (down from 57.3 last year).
  This equates to 1 in 189 companies entering insolvency in the past year.
• Historical Context:
  While insolvencies have risen post-pandemic, rates remain significantly below the 2008-09 recession peak of 113.1 per 10,000 companies.

Construction Sector Impact

Total Insolvencies in Construction (12 Months to November 2024): 4,264 cases, making up 17% of all company insolvencies.

• Key Challenges:
  • Cash Flow Issues: Payment delays in the supply chain continue to cripple smaller firms.

Although insolvency numbers have shown some stabilisation compared to the previous year, construction businesses remain highly vulnerable to broader economic pressures. Strategic planning and financial resilience are essential.

Stay Proactive to Avoid Financial Distress

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

Identify Early Warning Signs: Actively monitor payment patterns and the financial health of your customers and customer customers to stay ahead of potential issues.

Maximise Financial Tools: Take advantage of our services to optimise cash flow management and effectively mitigate risks.

Let’s Connect:
For tailored advice on overcoming financial challenges, contact us at 01527 503990. 

In the high-stakes world of construction, where tight profit margins and complex projects are the norm, retention funds often represent a forgotten opportunity. These funds, typically 1.5% to 5% of a contract’s value, are held back by contractors to ensure work quality but can remain unclaimed for months—or even years—after a project is completed.

For construction businesses already managing stretched resources, these funds can be a lifeline for improving cash flow. Yet, as retention funds accumulate across multiple projects, they frequently fall to the bottom of the priority list, leaving businesses to face the financial consequences.

What Are Retention Funds and Why Do They Matter?

Retention funds are designed as a safety net for contractors, ensuring that any defects are addressed before final payments are made. After a project is completed, half of the retention is released, with the remainder held until the end of the maintenance period, which can stretch up to two years.

While this system helps safeguard project quality, it creates significant challenges for businesses trying to track and collect these funds. Missed retention payments can significantly impact cash flow, turning what should be a minor administrative task into a costly oversight.

The Hidden Cost of Overlooked Retention

Unclaimed retention funds may seem insignificant in isolation, but when added up across projects, they can make or break a company’s financial health. Businesses that fail to prioritise retention management risk:

• Weakened Cash Flow: Delays in retention collection can leave companies without the liquidity needed to fund future projects.
• Missed Revenue Opportunities: Retention often represents untapped income.
• Increased Administrative Strain: The longer funds go unclaimed, the harder they are to recover, adding unnecessary complexity to collection efforts.

Best Practices for Managing Retention Funds

Proactive management is the key to turning retention funds from a financial headache into a reliable source of revenue. Industry experts recommend:

1. Establishing a Tracking System:
   Create a centralised database or spreadsheet to monitor each project’s retention percentage, release dates, and follow-up actions. Automated reminders can help ensure no payment is missed.
2. Standardising Documentation:
   Ensure contracts clearly outline retention terms and that all related documentation—such as invoices and completion certificates—are easy to access when needed.
3. Maintaining Communication:
   Proactive communication with contractors is essential. Sending reminders ahead of retention release dates helps ensure timely payments.
4. Engaging a Specialist:
   For businesses without the resources to manage retention in-house, working with a specialist service can simplify the process. Many experts offer risk-free models, only taking a commission when funds are successfully recovered.

Specialist Services: A Risk-Free Solution

How a Specialist Service Can Help

Our No Collection, No Fee recovery service removes the financial risk and hassle associated with retention collection. We handle the entire process with a clear, structured approach—allowing you to focus on core operations.

Benefits of Working with a Retention Specialist:

No Upfront Costs: We only take a commission upon successful recovery of funds.

Increased Revenue: Ensure all due funds are collected and reinvested in your business.

Improved Cash Flow: Receive collections faster, improving operational flexibility.

Turning Challenges Into Opportunities

Retention funds are an often-overlooked asset in the construction industry, but with the right approach, they can transform financial outcomes. By prioritising retention management—whether through in-house strategies or specialist services—construction firms can unlock significant revenue and strengthen their financial position.

The question isn’t whether retention matters; it’s how much unclaimed funds are costing your business. Now is the time to act.

For more insights on retention management and recovery strategies, contact a member of our team to find out more.