One in five builders say late payments threaten their business

Cashflow pressures remain a major challenge for self-employed construction and building workers, according to new research.

Late payments continue to pose a significant threat to self-employed construction workers, according to new research from The Accountancy Partnership.

The survey found that one in five construction professionals (20.6%) say late or non-payment from clients is the biggest threat facing their industry, highlighting the ongoing cashflow challenges experienced by many small construction businesses.

Delayed payments can be particularly damaging for small businesses which must often cover upfront costs for materials, equipment, fuel and labour before receiving payment for completed work.

Key construction sector findings

• More than two in five construction businesses (42.5%) say finding consistent work is the biggest threat to their industry
• Nearly half of construction workers (46.6%) say inflation and rising costs have negatively affected their work
• Nearly one in three builders (31.5%) say HMRC or tax administration has negatively impacted their business
• Around one in five builders (20.6%) say late or non-payment from clients threatens their business

Together, these figures suggest that many construction firms are navigating an environment where securing payment on time remains a significant challenge.

Lee Murphy, Managing Director at The Accountancy Partnership, said late payments can create serious financial strain for small construction businesses.

“Late payments can create serious pressure for small construction businesses, particularly when tax deadlines don’t move,” Murphy says. “Builders may still need to pay VAT or income tax even if they haven’t been paid yet, so keeping accurate records and planning ahead for tax liabilities becomes essential for maintaining financial stability.”

Murphy said late payments can quickly create wider financial instability for self-employed workers.

“Many freelancers are operating with tight margins and limited reserves. When payments are delayed, it can disrupt their entire financial planning cycle.”

The survey also highlights the competitive pressures affecting the sector.

Nearly half of (46.6%) say pricing or fees are the most common reason businesses lose clients, suggesting that tradespeople are increasingly forced to compete on price to secure work.

Murphy said that rising competition and economic pressures can make it difficult to maintain sustainable pricing.

“When clients are working with tighter budgets, there can be pressure to lower their prices just to win projects. But that can reduce margins and make businesses more vulnerable to cashflow problems.”

The findings also suggest that unpaid work is becoming increasingly common across the industry.

More than seven in ten (71.3%) say unpaid work is either expected or becoming more common in the construction industry, while around two in five (39.8%) report regularly working unpaid hours each week.

Murphy said this highlights the hidden pressures many self-employed workers face.

“Business owners often spend time preparing quotes, managing client communication or completing additional tasks that may not always be billable. Over time, those unpaid hours can significantly affect income.”

Despite these financial challenges, many self-employed people in construction remain relatively optimistic about the future.

The survey found that 58.9% feel somewhat secure about their financial future over the next 12 months, while 72.6% say they are confident they will match or exceed last year’s profits.

Murphy said that while challenges remain, construction demand across the UK continues to create opportunities for skilled tradespeople.

“Construction plays a fundamental role in the UK economy. Housing demand, infrastructure projects and renovation work all require skilled workers, and that demand isn’t going away.”

However, Murphy added that maintaining financial stability requires careful management.

“Strong financial oversight, clear invoicing processes and effective cashflow management are essential for operating in a project-based industry like construction.”

As the sector continues to adapt to economic pressures, the findings highlight the importance of addressing payment practices and financial management across the construction supply chain.

For the full report: https://www.theaccountancy.co.uk/business-news/the-industry-frustration-report-335854.html