UK Construction Sector Invoice Finance Statistics 2026
Construction pays on stage applications, holds back retentions and passes payment down long supply chains, so subcontractors often wait well beyond their invoice terms. It also records more company insolvencies than any other sector in England and Wales (4,040 in 2024, Insolvency Service). The figures below cover insolvencies, payment rules, sector size and the Bank Rate.
Key statistics
Invoice finance and asset-based lending that UK Finance members provide to UK businesses at any one time (UK Finance, checked 1 October 2026). Source: UK Finance
Bank of England Bank Rate, last changed on 18 December 2025, which feeds into invoice finance discount charges across construction. Source: Bank of England
Company insolvencies in construction in England and Wales in 2024, more than any other sector (4,389 in 2023; provisional, not seasonally adjusted). Source: The Insolvency Service
Payment term that must be included in all public procurement contracts, and in subcontracts that substantially contribute to them, from 24 February 2025 under the Procurement Act. Source: GOV.UK
Private sector businesses in construction in the UK at the start of 2025. Source: Department for Business and Trade, Business Population Estimates 2025
People employed by private sector businesses in construction in the UK at the start of 2025. Source: Department for Business and Trade, Business Population Estimates 2025
Annual turnover of private sector businesses in construction in the UK at the start of 2025. Source: Department for Business and Trade, Business Population Estimates 2025
Estimated amount owed to UK businesses in late payments at any given time, on average £17,000 per business affected. Source: Small Business Commissioner
| Metric | Value | Source |
|---|---|---|
| Invoice finance and asset-based lending that UK Finance members provide to UK businesses at any one time (UK Finance, checked 1 October 2026). | £20bn+ | UK Finance |
| Bank of England Bank Rate, last changed on 18 December 2025, which feeds into invoice finance discount charges across construction. | 3.75% | Bank of England |
| Company insolvencies in construction in England and Wales in 2024, more than any other sector (4,389 in 2023; provisional, not seasonally adjusted). | 4,040 | The Insolvency Service |
| Payment term that must be included in all public procurement contracts, and in subcontracts that substantially contribute to them, from 24 February 2025 under the Procurement Act. | 30 days | GOV.UK |
| Private sector businesses in construction in the UK at the start of 2025. | 885,485 | Department for Business and Trade, Business Population Estimates 2025 |
| People employed by private sector businesses in construction in the UK at the start of 2025. | 2.09 million | Department for Business and Trade, Business Population Estimates 2025 |
| Annual turnover of private sector businesses in construction in the UK at the start of 2025. | £429bn | Department for Business and Trade, Business Population Estimates 2025 |
| Estimated amount owed to UK businesses in late payments at any given time, on average £17,000 per business affected. | £26bn | Small Business Commissioner |
Source: UK Finance, Bank of England, The Insolvency Service, GOV.UK, Department for Business and Trade, Business Population Estimates 2025, Small Business Commissioner
View as plain-text Markdown
### UK Construction Sector Invoice Finance Statistics 2026: key figures | Metric | Value | Source | | --- | --- | --- | | Invoice finance and asset-based lending that UK Finance members provide to UK businesses at any one time (UK Finance, checked 1 October 2026). | £20bn+ | UK Finance | | Bank of England Bank Rate, last changed on 18 December 2025, which feeds into invoice finance discount charges across construction. | 3.75% | Bank of England | | Company insolvencies in construction in England and Wales in 2024, more than any other sector (4,389 in 2023; provisional, not seasonally adjusted). | 4,040 | The Insolvency Service | | Payment term that must be included in all public procurement contracts, and in subcontracts that substantially contribute to them, from 24 February 2025 under the Procurement Act. | 30 days | GOV.UK | | Private sector businesses in construction in the UK at the start of 2025. | 885,485 | Department for Business and Trade, Business Population Estimates 2025 | | People employed by private sector businesses in construction in the UK at the start of 2025. | 2.09 million | Department for Business and Trade, Business Population Estimates 2025 | | Annual turnover of private sector businesses in construction in the UK at the start of 2025. | £429bn | Department for Business and Trade, Business Population Estimates 2025 | | Estimated amount owed to UK businesses in late payments at any given time, on average £17,000 per business affected. | £26bn | Small Business Commissioner | Source: UK Finance, Bank of England, The Insolvency Service, GOV.UK, Department for Business and Trade, Business Population Estimates 2025, Small Business Commissioner
“The Insolvency Service figures record outcomes, not causes, and construction is a large sector (the Department for Business and Trade counts about 885,000 private sector construction businesses), so a high count does not by itself show a higher failure rate. Construction-specific payment delay and cost figures could not be traced to a published source and are not shown.”
What the numbers mean
Construction is exposed to structural cash flow pressure. Long supply chains, milestone-based billing, retentions and extended subcontractor payment terms combine to create a funding gap that affects firms of all sizes. According to the Insolvency Service, construction recorded more company insolvencies than any other UK sector in 2024, with 4,040 cases in England and Wales, against 4,389 in 2023.
Invoice finance, including selective invoice discounting and whole-ledger factoring, can release cash against certified applications for payment rather than waiting for a main contractor or employer to settle. Confidential invoice discounting products usually require minimum turnover thresholds and clean debtor books, which can exclude smaller subcontractors. Factoring, where the provider manages collections, is more accessible but is disclosed to your customers.
The Bank of England Bank Rate is 3.75%, effective from 18 December 2025. Providers set their own margin and fees, so benchmark the total facility cost, including service fees and concentration limits, before committing. Public contracts must include a 30-day payment term, passed down to subcontracts, since 24 February 2025; private sector supply chains have no equivalent rule on payment timing.
FAQs
What types of invoice finance are most commonly used in UK construction?
Selective invoice discounting and whole-ledger invoice discounting are the most commonly used products among larger construction firms. Smaller subcontractors more often use factoring, where the finance provider handles credit control. Some lenders also offer facilities specifically structured around applications for payment and retention releases, which suit construction billing cycles better than standard invoice discounting products.
Can a construction firm use invoice finance against retention payments?
Some specialist providers will advance against agreed retention sums once they become contractually due and undisputed. Standard invoice finance facilities typically exclude retentions because they carry a higher risk of dispute and delayed release. If retention finance is important to your business, you should ask lenders specifically whether their facility covers retention invoices and on what terms.
How does the Bank of England base rate affect invoice finance costs in construction?
Invoice finance providers price discount charges as a percentage over the Bank of England base rate, which currently stands at 3.75% following the December 2025 adjustment. A rise in base rate increases the daily cost of borrowing against your invoices. Total facility cost should be assessed as a combination of the discount charge, the service fee, and any minimum usage or arrangement fees.
Why does construction have higher insolvency rates than other sectors?
Construction firms face a combination of factors that increase insolvency risk. These include milestone-based revenue that creates income gaps, retentions withheld for extended periods, exposure to main contractor insolvency cascading down the supply chain, and materials price volatility. The Insolvency Service recorded 4,032 construction company insolvencies in England and Wales in 2024, more than any other sector.
What regulation covers late payment in UK construction supply chains?
The Late Payment of Commercial Debts (Interest) Act 1998 sets a default 30-day payment term and allows businesses to charge statutory interest of 8% above base rate on overdue invoices. The Construction Act 1996, as amended, also requires payment notices and pay less notices to be issued within defined timeframes. However, enforcement in private sector supply chains remains largely at the creditor's discretion, and many subcontractors are reluctant to pursue statutory interest against ongoing clients.
Founder & Managing Director, Muswell Rose, founder and PSC of Best Business Loans Ltd
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind Market Invoice. He spent over three years as managing director of Penny, a UK invoice finance business, and his career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library.
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