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Insight · Reducing risk

Signs the main contractor
above you is going bust.

The accounts tell you eighteen months late. What tells you now is behaviour: valuations shaved without explanation, payment slipping a week at a time, and the commercial team turning over.

Published ·Updated ·3 min read·Written by

A modern office interior

Filed accounts describe a position up to eighteen months old. Behaviour changes first: valuations shaved without explanation, payment slipping a week at a time, commercial staff turning over, decisions taking longer, and small suppliers being paid ahead of large ones. Any one is a question. Several together is an answer.

Why behaviour comes before the accounts

A company in difficulty does not announce it, and by the time the difficulty appears in filed accounts it has usually been true for a year or more. But a business under cash pressure has to do things differently every week, and those things are visible to the people it trades with.

Which puts a subcontractor in an unusually good position. You see how the firm behaves monthly, which is information the credit agencies do not have.

The commercial signals

  • Valuations reduced without explanation. Not a dispute about measure, which is normal, but figures cut with no reasoning given. It is a cash decision dressed as a commercial one.
  • Payment slipping a few days at a time. The pattern matters more than any single late payment. Terms of thirty becoming thirty-eight, then forty-five, is a firm managing a shrinking balance.
  • Retention queries going unanswered. Retention is the money a struggling business least wants to talk about, so silence on it is meaningful.
  • Sudden interest in your final account. A firm that has ignored the account for months and now wants it agreed quickly may be tidying its position before something happens.
  • Requests to change terms. Longer payment periods, larger retention, or a request to hold off invoicing until next month.

One late payment is a bad month. Terms that quietly lengthen by a week each quarter is a direction of travel.

The signals on site

Often clearer than anything commercial, and visible to people who never look at a ledger.

Deliveries arriving late or not at all, because suppliers have moved the firm to pro forma. Skips not being emptied and welfare not being serviced, which are small recurring costs that get stopped first. Plant going off hire and not being replaced. Sub-trades leaving site and not coming back. And the most reliable one: the site team not knowing what is happening next week.

The public record

Three checks that take minutes and complement the behavioural signals. Late filing of accounts after years of filing on time. A cluster of new charges registered recently, particularly to invoice discounters. And unsatisfied county court judgments, which in construction usually means a subcontractor in your position went to court and won.

The method is in credit checking the firm above you, free, in twenty minutes, and it is worth re-running on your largest client annually rather than only at the start.

What to actually do

Not walk away. Most firms showing one of these signals are having a difficult quarter and will be fine, and abandoning a client on suspicion costs you a client.

What changes is your exposure management. Keep applications current and complete, because a firm that fails will pay nothing on a badly evidenced claim and the same nothing on a good one, but an administrator can only deal with what is documented. Do not let the balance build: applying monthly and chasing on the date matters more with this client than with a healthy one. Be careful about ordering materials specifically for their job. And know what proportion of your turnover sits with them, because that is the number that decides whether their failure is a bad year or the end of yours.

Where to start, on Monday

Take your three largest clients and, for each, write down the average number of days they actually took to pay over the last six invoices. Not their stated terms. The actual figure, and whether it is moving.

Then check how much of last year’s turnover each represented. A client showing two behavioural signals and holding a third of your turnover is a different conversation from one showing the same signals and holding five per cent.

Where this touches the platform

Unibuild holds outstanding value per client, aged into current, thirty, sixty, ninety and one hundred and twenty plus days, with each application, receipt and retention behind it. That turns the behavioural signals in this article into a number: how much of your money is sitting with the firm that has started shaving valuations. It also records what was certified against what was applied for, so a pattern of quiet reductions shows up as a trend rather than as a feeling.

Cost control Financial and invoicing Applications for payment Subcontractor management

Sources

Checked against the source rather than against commentary. Where a schedule, a rate or a threshold is definitive on a government site, read it there.

Asked most often

The follow-up questions.

The free public checks are set out in credit checking the firm above you.

What are the signs a main contractor is about to go bust?
Behavioural signals come first: valuations reduced without explanation, payment slipping a few days at a time, retention queries unanswered, sudden urgency about agreeing your final account, and requests to lengthen terms. On site: late or missing deliveries, welfare not serviced, plant going off hire without replacement, and sub-trades leaving and not returning.
What are the on-site signs a main contractor is struggling?
Deliveries refused or placed on stop by merchants. Trades leaving site and not returning. Site staff turnover, especially the commercial team. Valuations assessed down harder than the work justifies, and certificates issued late. Small retentions and final accounts going quiet. Any one is ordinary. Three at once, on the same job, is a pattern worth acting on before the letter arrives.
Is a request to extend payment terms a warning sign?
It can be, particularly when it arrives without a commercial explanation or alongside other signals such as unanswered retention queries or lengthening actual payment times. On its own it may simply be a group policy change. The question to ask is whether the stated reason matches what you are seeing elsewhere in the relationship.
Is a request to extend payment terms a reliable warning sign?
It is one of the more reliable, particularly when it arrives suddenly and applies across the supply chain rather than to your account alone. A planned change is communicated in advance with a commercial reason. A funding problem arrives as a call in the last week of the month asking for flexibility just this once. The second one rarely happens only once.
Do the published accounts show a contractor is in trouble?
Too late to act on, usually. Accounts can be filed nine months after a year end, so by the time the numbers show a problem the position they describe is over a year old. They are useful for the trend and for confirming what you already suspected. The signals that arrive in time are behavioural: payment timing, staff turnover, how quickly queries get answered, and what the other trades on site are saying.
Why do the accounts not show it earlier?
Because filed accounts can describe a position up to eighteen months old, while a business under cash pressure changes how it operates every week. A subcontractor trading with the firm monthly sees behaviour the credit agencies cannot, which makes those signals both earlier and more useful.
How often should I re-check a client I already work for?
At least annually on the public record, and continuously on behaviour. The check most firms never repeat is the one on their largest client, which is precisely the one where the answer matters most, because concentration turns a bad debt into an existential event.
What should I do if I spot the warning signs?
Reduce the exposure rather than terminating the relationship, because most firms showing signs do not fail and you still want the work. Apply on time, chase certificates harder, stop letting retention drift, and decline to take on additional packages that increase what is outstanding. Do it quietly. A subcontractor visibly pulling back accelerates exactly the problem it is reacting to.
Should I stop working for a contractor showing warning signs?
Usually not. Most firms showing a single signal are having a difficult quarter and will recover, and abandoning a client on suspicion costs you the client. What should change is exposure management: keep applications current, do not let the balance build, be cautious about ordering materials specifically for their job, and know what share of your turnover sits with them.
Should I keep working for a contractor showing warning signs?
Usually yes, on tighter terms, because walking away from a solvent client on suspicion costs certain money to avoid a possible loss. What changes is the credit you extend: smaller packages, faster applications, firmer chasing, and a hard limit on how much is ever outstanding. Reserve outright refusal for a contractor who is already missing payments to you, which is evidence rather than a signal.
Next step

Watch the exposure, not just the client.

The behavioural signals arrive eighteen months before the accounts do. They only help if you also know how much of your money is exposed to that client.

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