Why Debt Recovery in the Construction Industry Is So Complex—And How to Overcome It
May 29, 2025
The construction sector is one of the most challenging environments when it comes to recovering unpaid invoices.
With long project timelines, multi-layered contracts, and the infamous use of retention clauses, many subcontractors and suppliers find themselves out of pocket for months—sometimes even years. At PayFor, we understand the intricacies of this industry and have developed debt recovery strategies tailored to meet its unique demands.
The Construction Sector’s Perfect Storm for Payment Disputes
In construction, delayed payments are not the exception—they're often the norm. Projects are large, complex, and involve multiple parties such as developers, main contractors, sub-contractors, and specialist suppliers. With every additional layer, the risk of miscommunication, disputes, and ultimately non-payment increases.
Many businesses also fall victim to “pay-when-paid” arrangements, unclear scope definitions, or clients using minor defects as justification to delay or deny payments. All of this is further complicated by contracts that often span dozens of pages, with ambiguous terms buried in the fine print.
The Hidden Trap: Retention Clauses
Retention clauses are one of the biggest headaches in construction finance. A common practice is to withhold 5–10% of the contract value until "practical completion" or even until the end of the defects liability period—often a year or more after project completion.
While designed to ensure accountability, these clauses are frequently abused. We’ve seen cases where clients drag their feet on final sign-offs or use vague performance concerns as an excuse to withhold the retention altogether. For smaller firms, this can represent a serious cash flow crisis.
How Payfor Tackles Construction Debt Recovery
At Payfor, we don’t just chase invoices—we dig into contracts. Our team understands construction law, retention mechanics, and payment terms that apply across various tiers of contractors. This means we know how to break down barriers, engage with the right stakeholders, and speak the language of your industry.
Our 30-day Chase Campaign kicks off with a formal notification to the debtor, followed by daily phone calls and weekly emails that apply steady, professional pressure. If the debtor remains uncooperative, we assess the legal standing of your contract and help escalate to litigation if necessary, working with law firms who specialise in the construction sector.
Protecting Future Projects
Beyond recovery, our team can also help review your contracts before you sign them. Through our VendSafe due diligence service, we assess potential partners and identify red flags before they become problem clients. If you're regularly engaging in high-value or cross-border projects, this added protection is often worth its weight in gold.
Turn Your Unpaid Invoices into Recovered Revenue
If your construction business is facing delayed payments, unfair retention holds, or ghosting clients, you don’t have to write it off. Payfor’s Commercial Debt Collection Service is built for these complex cases. Our 30-day Chase Campaign includes daily calls, weekly emails, and a structured approach that moves swiftly to legal action if needed.
Whether your contracts are under UK jurisdiction or international, we help you recover what's rightfully yours—professionally and without damage to your brand.
Let us take the weight off your shoulders. Reach out to Payfor today.
Disclaimer:
This blog post is intended for informational purposes only and should not be construed as legal advice. The information provided in this post is based on general principles and may not apply to specific legal situations. Laws and regulations vary by jurisdiction and can change over time. Readers are advised to seek professional legal counsel before making any decisions based on the information provided in this blog post. Payfor Ltd is not a law firm and does not provide legal services. The company disclaims any liability for actions taken based on the contents of this blog post.
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