Construction loses more companies to insolvency than any other UK sector — roughly 4,000 a year. Most don't collapse overnight. They wobble for months first, and the wobble is visible if you know where to look. Subcontractors who read the signs early get paid, get out, or at least stop the bleeding. Everyone else funds the administration.
Here are the signals, roughly in the order they tend to appear.
1. Payment behaviour changes
This is the earliest and most honest signal, because cash flow fails before anything else does.
- Payment terms quietly stretch. 30 days becomes 45, then 60, then “end of next month”. Each delay has a plausible story; the trend is the story.
- Round-sum payments on account. You invoice £48,300 and receive £20,000 “for now”. Companies paying what they can instead of what they owe are rationing cash.
- New deductions appear. Sudden back-charges, contra-charges and quality disputes on work that was signed off — invented deductions are a struggling company's favourite way to shrink its liabilities.
- The payment person becomes unreachable. Accounts stop answering; every query needs “the director”, who is always on site.
On CIX, these patterns show up as a falling payment score, rising average delay, and abandoned-invoice flags — reported by subcontractors while it's happening, months before anything reaches Companies House.
2. The paperwork slips
Companies in distress file late, because the accountant is unpaid or the numbers are ugly.
- Overdue accounts or confirmation statement at Companies House — check the filing dates, not just the status.
- New charges registered — fresh borrowing secured on the company's assets, especially several in quick succession, means someone else already doubts the cash flow. Remember: secured lenders are paid before you.
- An auditor resigns or accounts carry a “going concern” note — for larger firms, treat this as a formal warning.
3. The site tells you
- Suppliers put the account on stop. Materials start arriving in your name, or the main contractor asks you to buy them “to keep things moving”.
- Labour drains away. Agency operatives disappear (agencies pull people the moment invoices age); good direct staff leave for competitors.
- The programme accelerates on paper only. Aggressive chasing of certifications and valuations — the company is pulling cash forward through the project.
- Key people vanish. The QS “leaves suddenly”; the contracts manager stops returning calls. Insiders see the numbers first.
4. The commercial behaviour turns strange
- They bid everything, cheap. Desperate companies buy turnover to feed cash flow, pricing below cost. Today's problem becomes next quarter's collapse.
- Retention requests and final accounts stall indefinitely — money they intend never to pay.
- They ask for unusual arrangements: upfront payments from clients alongside stretched terms to subcontractors is the classic squeeze.
What to do when the flags line up
- Cap your exposure now. Shorten your application cycle, invoice everything certifiable, chase every aged debt this week — politely, relentlessly, in writing.
- Stop feeding the fire. Don't start the next phase against a growing unpaid balance. “We'll sort it at final account” is how five-figure debts become six.
- Get variations and instructions in writing — if it ends in insolvency or adjudication, paper is all that counts.
- Check the company properly — Companies House filings, charges, the directors' other companies (any recent dissolutions?), and what other subcontractors are reporting on CIX right now.
- If it collapses: register with the administrator or liquidator immediately, submit your claim with full paperwork, and consider retention of title if you supplied materials. Then report the experience on CIX — especially if the same faces reappear under a new name (see our phoenix companies guide).
The pattern beats the promise
Any one of these signs has an innocent explanation. Three of them together, trending the wrong way, almost never do. The subcontractors who survive contractor insolvencies aren't luckier — they just believed the pattern earlier.