If you supply goods or labour into construction projects, you have probably already noticed that the ground feels less solid than it did even a few months ago. The UK Construction PMI dropped to 39.7 in April, which is firmly in contraction territory and the steepest fall in some time, whilst construction recorded almost four thousand insolvencies in 2025 representing seventeen percent of all corporate failures, and that pattern has continued into early 2026 with no obvious sign of relief.
If you are one rung down the chain from a main contractor that is wobbling, this is not a situation where you can afford to find out about it from a letter from the administrators. So here is a practical guide to spotting the warning signs early, protecting what you can protect, and knowing what to do if the worst actually happens.
The Warning Signs Worth Watching For
Main contractors rarely collapse without warning, although it can certainly feel that way from the outside. The earliest signals tend to be subtle changes in payment behaviour, including invoices being paid later than usual, payments being made in part rather than in full, or sudden disputes about previously agreed valuations that have a faintly desperate flavour to them. You may also notice key staff leaving, suppliers refusing to deliver without payment up front, or rumours circulating amongst other subcontractors on site.
None of these on their own means certain failure, but a combination of them at the same time means you should be paying very close attention to your exposure and acting accordingly.
Retention of Title: Use It or Lose It
If you supply materials, a properly drafted retention of title clause in your terms of business is one of the most valuable protections available to you, because it means ownership of the goods does not pass to your customer until you have been paid in full. The crucial word there is properly, because retention of title clauses are notoriously easy to draft badly, and a clause that has not been correctly incorporated into the contract or that does not address mixed goods, processed goods or proceeds of sale will often fail at the moment you actually need it.
If you have not had your terms reviewed in the last two years, or if you have never had them reviewed at all, this is genuinely not the year to leave that to chance.
Construction Act Rights and Adjudication
The Housing Grants Construction and Regeneration Act gives subcontractors and suppliers in the construction industry some genuinely useful rights, including the right to suspend performance for non payment, the right to interest on late payments, and the right to refer disputes to adjudication for a binding decision within twenty eight days. Adjudication is faster and cheaper than court proceedings, and the threat of it alone often produces a payment that months of polite chasing did not.
These rights are not always well understood at the smaller end of the supply chain, which is unfortunate because they were specifically designed to protect the businesses that need protection most.
What Happens If Your Customer Enters Administration
If a main contractor enters administration, the first thing to understand is that there is an immediate moratorium that prevents creditors from taking enforcement action without the consent of the administrator or the court. This means you cannot simply turn up and remove materials, even if you have a retention of title clause, although the clause may well still entitle you to recover them through the proper process.
You will receive a notice inviting you to submit a claim as a creditor, and at this point you need to do three things quickly. Identify any goods on site that are subject to retention of title and notify the administrators in writing. Calculate the full sum owed including any retention monies, work in progress and unpaid invoices. Assemble the documentation that proves it, because unsupported claims tend to disappear into the bottom of the pile.
Protecting Yourself On Future Contracts
Going forward, the simplest protections are also the most effective. Run credit checks on new customers and review the credit position of existing ones at least quarterly, given how quickly things are moving. Keep your exposure to any single customer within sensible limits, particularly where that customer is in a sector under pressure. Make sure your terms and conditions are properly incorporated into every contract, retention of title clauses included. Issue invoices promptly, chase them properly, and do not accept consistently late payment as the price of doing business, because consistent late payment is very often the warning sign before something worse.
If You Have Already Been Caught Out
If a customer has gone under owing you money, or if you can see one heading that way and you are not sure where you stand, the worst thing you can do is wait and hope. Get in touch with our team for a confidential conversation, and we will tell you straight what your realistic recovery prospects look like, what protections you should be putting in place going forward, and where the genuine risks sit in your customer book.
Adcroft Hilton: Debt, Insolvency & Bankruptcy Specialists
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