Tackling the insolvency crisis in the UK construction sector

The UK has the highest number of builder collapses and some of the worst payment times in the world, creating shockingly high rates of insolvency in the construction sector.  

Many firms are collapsing as a result of poor cashflow due to inequity in the supply chain. The larger construction firms are preserving working capital in the wake of economic uncertainty, and this is bad news for the small businesses who make up 98% of the construction sector who often have to wait way too long to get paid.  

To get to the heart of the problem, ProjectPay, the construction payments fintech, received a project grant funded by Innovate UK, to research and test how to solve cashflow problems in the construction industry and published its findings in March 2025. 

The report highlighted that the construction industry is burdened by outdated financial models and banking structures with many small businesses unable to access low cost or affordable working capital. Project Bank Accounts, used by the government to provide some protections, are also largely ineffective, costly and should be replaced.  

Fundamental reforms and new payment models to address and prevent recurring financial misconduct are now underway with the introduction of the ProjectPay payment platform which will create a fairer system for construction businesses and reduce financial pressure across the supply chain.    

With a government building boom underway this year, in an effort to boost the UK economy, having an effective fintech payment platform in place is essential to prevent a profitless boom and more business collapses. It also paves the way to a brighter future as construction companies work with fintechs to help move the industry forward.