Friday
Wages are due and the payment run has slipped.
SectorsConstruction
Construction
You have done the work. The valuation is in. The money is not.
The work is done, signed off and valued long before the money moves, and a retention is held back after that. Construction consistently records the highest rate of late payment in the UK.
That says nothing about the businesses. It is how the industry is built.
76+ construction deals recorded.
ClientTerms typically 30 days
Main contractorPayment averaging 61 days
SubcontractorRetentions held above
SupplierPaid on the subcontractor’s cash
Why the money moves the wrong way
Materials are bought upfront and labour is paid weekly, but revenue arrives only when someone signs a payment certificate, often weeks later.
Payment runs down a chain from client to main contractor to subcontractor to supplier, so a delay at the top reaches the smaller businesses last and hits them hardest.
Then retentions. Typically 3% to 5% of contract value withheld across interim payments, half released on practical completion and the rest held until the end of the defects liability period, sometimes two or three years after the work was done.
Money you have earned sits outside the business while you pay subcontractors, buy materials and fund the next job.
What that looks like in practice
Tranches
A developer is paying in stages and the stage is late.
Materials
Out of the business, or out of the director’s own pocket, because the job could not wait.
A new contract
The cost base has moved before any revenue has.
Retentions
Sitting with a main contractor with no realistic date on them.
Construction has had the highest number of insolvencies of any UK sector in recent years, with specialist subcontractors hit hardest, and when money is trapped in retentions or 60 to 90 day payment cycles even profitable firms run out of working capital.
What usually fits
A credit line, for the rainy day
Undrawn until a payment run slips, repaid when it lands. It costs nothing while it sits there, and a late certificate does not become a payroll problem.
A business credit card, for materials
Materials go on the card instead of out of the business account, with cashback on the spend and an interest-free window before it clears. If you are paying for materials personally, fix that first.
A term facility, for real capital
Plant, vehicles, a yard, or funding the start of a contract already won. Fixed repayments over an agreed term, for something that pays back over years.
Where invoice or contract finance is the right structure, we will say so. Products exist that are built specifically to accommodate retentions and applications for payment.
What is changing
On 24 March 2026 the government announced what it called the toughest late payment crackdown in over 25 years: a 60-day cap on payment terms when large firms pay smaller suppliers, mandatory statutory interest at 8% above base rate, and new powers for the Small Business Commissioner to investigate and fine persistent late payers.
The consultation response also confirmed an intention to prohibit the deduction and withholding of retention payments under construction contracts.
The reforms still need primary and secondary legislation, with the first measures expected late 2026 or early 2027. Until then, the gap is still the gap.
What we need
Six months of business bank statements. Here the statements tell the story better than the accounts do. A business can be profitable on paper and completely out of room in the account, and the second of those is what any lending partner will underwrite against.
Retentions and late payment come with the sector. They are not a weakness in your business.