Contractor Collapse: Protect Your Cash This Month

Torsion Construction, a £165m turnover contractor, went into administration on Tuesday. Interpath is now running the wind-down. Directors had been exploring rescue options but trading conditions across construction sank them. This is not an isolated case — it's the latest in a run of mid-size contractor failures this year.

What this means for your hours and margin

If you're a subcontractor, supplier or trade sitting underneath a main contractor, an administration doesn't just hurt the company that collapsed. It hits everyone owed money by it. Unpaid invoices become unsecured claims. You join a queue behind the bank, HMRC and secured creditors. Recovery, if it happens at all, can take 18 months and pay pennies in the pound.

Work through a concrete example. Say you're a groundworks firm with £48,000 outstanding on a job for a contractor that's just gone into administration. That £48,000 was already spent — on wages, plant hire, materials. You still owe your suppliers. You still owe your team. The gap in your cash flow doesn't wait for the administrators to sort out creditor claims. Meanwhile you've likely got other live contracts with the same firm, meaning retentions and final accounts you'll never see either.

Now multiply that across a supply chain. Every subcontractor on Torsion's books is running the same calculation this week. Some of them will fold too, because one bad debt at the wrong time is enough to tip a tight-margin trade business over.

What to do about it this month

• Run a credit check on every live client and every new tender before you sign anything, not just when you onboard them.
• Watch for the warning signs: late payments, requests to extend terms, sudden project delays, or a contractor pushing harder on price than usual.
• Tighten payment terms on anything you can — shorter cycles, staged payments, deposits on materials-heavy jobs.
• Get credit insurance on your biggest few contracts if you don't already have it. It's cheaper than one bad debt.
• Set up automated monitoring on your key clients' company filings and credit scores so you get an early flag, not a surprise. This is one of the few places AI genuinely earns its keep for a trades business — it watches the paperwork so you don't have to, and it can flag a deteriorating client months before administrators are called in.

None of this stops contractors going bust. It stops you being the next one dragged down with them.