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.

Is your business overlooking overdue retention payments? Cashflow is the lifeline of any business—big or small.

Take a look at our latest video in which Non-Executive Director Philip King FCICM chats with Laura Humphries, Head of Customer Development, about how cashflow should be the number one priority for businesses and how retention can help with this.

At Top Service, we’ve helped members recover substantial retention payments, turning lost money into vital cashflow.

💬 As Philip says:
“Turnover is vanity, profit is sanity, but cash is reality.”

To learn more about how we can help you minimise risk and maximise cash flow, call in to speak with one of our experts today on  01527 518800.

Top Service CEO, Emma Reilly FCICM says:

“The new fair payment code introduced by the small business commissioner is a welcome initiative for the UK construction industry, potentially addressing the persistent issue of late payments to suppliers. However, its effectiveness may be limited without statutory backing.

In the construction sector, where large contractors often dictate payment terms, a legally binding requirement could significantly improve payment practices. The success of this initiative will largely depend on:

💡 Widespread awareness of the initiative.

💡 Integration into risk assessments by businesses who are able and

government departments when evaluating tenders

While the code is a step in the right direction, making it a legal obligation could truly transform payment culture in the UK construction industry, benefiting smaller subcontractors and suppliers who frequently bear the brunt of late payments.”

Emma continued “It has been my pleasure this morning to register Top Service’s interest in applying for the Gold Award”.

You can read more about the New Fair Payment Code here: https://www.smallbusinesscommissioner.gov.uk/new-fair-payment-code/

Emma Reilly, FCICM, CEO of Top Service Ltd and a renowned credit expert, shares insights on the success of recent webinars and invites your suggestions for future topics. She also highlights the importance of staying informed about customer performance, especially in light of the recent ISG collapse, and how Top Service can support you in managing these risks.

In October 2024, company insolvencies dropped by 10% compared to September 2024, and were 24% lower than October 2023. However, insolvencies remain significantly higher than pre-pandemic levels, reflecting ongoing economic challenges.

October 2024 Breakdown:

Total Insolvencies: 1,747 (compared to 1,950 in September 2024)

🔻 Creditors’ Voluntary Liquidations (CVLs):
1445 cases, down 7% from last month, 83% of all insolvencies.

 CVLs remain the dominant form of insolvency, reflecting ongoing financial challenges for businesses unable to restructure or secure financing.

📉 Compulsory Liquidations:
188 cases, reflecting a 14% drop from September

🚀 Administrations:
100 cases, Administrations saw the sharpest decline with numbers falling by 35% from September and 28% from October 2023.

🔽 Company Voluntary Arrangements (CVAs):
12 cases, down 29% from September

Insolvency Rates & Long-Term Trends:

12-month insolvency rate: 53.8 per 10,000 companies, down from 56.5 last year.

This translates to 1 in 186 companies entering insolvency over the past year

Although rates have risen since pandemic lows, they remain well below the 2008-09 recession peak of 113.1 per 10,000.

Construction Sector Impact:

The construction industry remains the most affected, with 4,264 insolvencies in the 12 months leading to September 2024, accounting for 17% of all cases.

This reinforces the vulnerability of construction businesses to cash flow issues, material price volatility, and market uncertainty.

📈 While insolvency numbers show month-to-month improvement, the construction sector must remain vigilant against broader economic pressures. Planning and resilience are key.

⚠️ Staying Ahead of Early Warning Signs ⚠️

We encourage all credit management teams across industry to stay vigilant and monitor early warning signs of financial distress. Having the right tools and insights can help minimise debt and maximise cash flow.

📞 Get in Touch
To learn how we can help your business, call us today to speak with one of our experts on 01527 503990. Let’s work together to navigate these uncertain times.

If your address has been used as a company’s registered office without your consent, there are clear steps in place to address this issue, thanks to the Companies (Address of Registered Office) Regulations 2016, effective since 6 April 2016.

This default address is used in cases where an address may have been listed without proper consent. Prior to these regulatory changes, individuals whose addresses were used without permission had little recourse for removing them from company filings, which often resulted in receiving unsolicited mail, visits from debt collectors, and even potential credit issues.

Rules to Prevent Unauthorised Address Use:

• Who Can Apply: Anyone can now request that Companies House change a company’s registered address if it’s being used without authorisation.
• Registrar’s Process: The Registrar will notify the company of the application and allow at least 28 days for the company to respond, prove authorisation, or update the address.
• Default Address: If no response or proof is provided, the Registrar will change the registered office to Companies House’s default address:
  PO Box 4385, Cardiff, CF14 8LH

How This Helps You: This procedure provides a quicker, simpler remedy to prevent unauthorised use of private addresses. Importantly, mail sent to the default address will not be opened by Companies House and will be destroyed after 12 months if unclaimed.

For further details on these regulatory changes, see The Gazette’s article on this update here.