Construction unpaid invoices are among the most common commercial debts in the UK building trade: stage payments ignored, retentions held past the release date, variations never certified, and final accounts left open while cash has already been spent on labour and materials.
Debt Collection UK (a trading style of PASECOM GROUP LTD) introduces B2B files to independent partner agencies. We are not solicitors, we are not authorised by the Financial Conduct Authority, we do not collect consumer credit, and we do not issue proceedings. PASECOM GROUP LTD was incorporated on 7 April 2026. Recovery is not guaranteed.
Why construction unpaid invoices stall
Construction cashflow depends on a chain: employer, main contractor, subcontractor, specialist. When one link delays payment, every firm below it feels it. Typical B2B files include:
- interim applications unpaid by the final date for payment;
- retentions held past release;
- variations or dayworks never certified;
- materials invoices with proof of delivery but a later dispute.
A polite reminder is not a recovery strategy. Construction creditors have both Construction Act payment tools and separate late-payment rights under the 1998 Act.
What the Late Payment Act adds to a building-trade invoice
On a qualifying commercial contract for goods or services, the Late Payment of Commercial Debts (Interest) Act 1998 implies a right to statutory interest and fixed-sum compensation when another business pays late.
GOV.UK states that statutory interest is 8% plus the Bank of England base rate for business-to-business transactions, and that you cannot claim the statutory rate if the contract already sets a different interest rate. Compensation bands (£40 / £70 / £100 per late payment) sit on top of interest where the Act applies.
Construction contracts remain commercial supplies when both sides act in the course of a business. Interest and compensation strengthen a demand on paper; they do not compel payment or override insolvency. Set the figures out clearly; do not invent them.
Construction Act payment rights (HGCRA) in plain terms
Many construction contracts also sit under Part II of the Housing Grants, Construction and Regeneration Act 1996 (as amended). In outline:
- the contract must provide an adequate payment mechanism and a final date for payment;
- section 111 requires the payer to pay the notified sum by that final date, unless a compliant pay less notice is given in time;
- section 108 gives a contractual right to refer a dispute to adjudication , which is often faster than a county court claim for interim payment fights.
Adjudication and county court litigation are different routes. Debt Collection UK does not conduct adjudication or issue claims. Pay less notices, true-value disputes, or enforcement of an adjudicator’s decision need construction-dispute advice from a solicitor — not a collection introduction alone. For a straightforward unpaid application or materials invoice that is not genuinely disputed, commercial recovery is often the proportionate first step.
Pre-action rules before you threaten court
If you later issue a county court claim in England and Wales for a construction or engineering dispute, the court will normally expect the Pre-Action Protocol for Construction and Engineering Disputes (2nd edition) to have been followed. Paragraph 1.1 applies it to all construction and engineering disputes. Paragraph 7 requires a letter of claim with the parties’ details, a brief proportionate summary of the claim (including principal contractual or statutory provisions and a monetary breakdown), any experts already instructed, and whether you want the Protocol Referee Procedure.
The defendant should acknowledge within 14 calendar days and send a letter of response within 28 days of receipt. If there is no acknowledgment within 14 days, or no response within 28 days, the claimant may commence proceedings without further compliance with that Protocol. Paragraph 2 excludes certain cases (for example enforcement of an adjudicator’s decision under section 108, or where all parties agree in writing to dispense with the Protocol).
Where no specific protocol applies, follow the Practice Direction – Pre-Action Conduct and Protocols: exchange enough information to understand each other’s position, allow a reasonable time to reply, and keep the steps proportionate. The Debt PAP Letter of Claim regime applies when the debtor is an individual (including a sole trader), not when you chase a limited company. For what to put in a commercial demand, see our guide to a letter before action for business debts and the service page on letter before action.
GOV.UK explains how to make a court claim for money and notes that Scotland and Northern Ireland use different processes. We introduce B2B files; we do not issue proceedings.
A practical recovery sequence for construction unpaid invoices
- Confirm the debtor and the contract. Use the correct legal name and registered office (or trading name for a sole trader). Attach the purchase order, subcontract, or order confirmation that creates the debt.
- Assemble proof of entitlement. Applications, valuations, payment notices, pay less notices (or their absence), delivery notes, signed timesheets, variation instructions, and retention release clauses matter more than another chased statement.
- Send a clear commercial demand. State the principal, due date, how the sum is calculated, any statutory interest and compensation you can actually claim, and a deadline for payment or a written dispute.
- Escalate if ignored. A partner agency can chase and send a compliant formal letter. You decide whether to move to adjudication or court with your own advisers.
- Do not wait forever. Aged construction debt is harder once the site is demobilised or insolvency intervenes. Recovery is not guaranteed at any stage.
When to instruct a collection partner
If reminders have failed, the sum is not genuinely disputed on the papers, and the debtor is still trading, business debt collection through a specialist partner is often more useful than another site meeting that produces no payment. Upload the file via unpaid invoices.
On files introduced through this site, partners usually work on a fixed percentage / commission of what they recover (often structured as no collection, no fee), agreed in writing before they act. This guide is free; instructing a partner to chase an overdue invoice is not. Never treat “no collection, no fee” as “recovery is free” — commission is taken from recovered sums when collection succeeds, and recovery is never guaranteed.
Frequently asked questions
Do construction unpaid invoices attract statutory interest?
Yes, on a qualifying B2B commercial debt under the Late Payment of Commercial Debts (Interest) Act 1998, unless a contractual interest rate that is a substantial remedy already applies. See GOV.UK.
Does the Construction and Engineering Pre-Action Protocol apply to a simple unpaid invoice?
The Protocol applies to all construction and engineering disputes. Paragraph 5 stresses proportionality: for modest-value payment claims, the letter of claim and response can be simple. Adjudication enforcement and some other cases are excepted under paragraph 2.
Can I withhold work or walk off site because an invoice is unpaid?
Suspension and termination rights depend on the contract and the Construction Act. Getting those steps wrong can create a counterclaim. Take construction-contract advice before suspending; a collection partner does not advise on site rights.
What if the debtor is a limited company that ignores every demand?
Company-to-company claims sit outside the Debt PAP. Follow the Construction and Engineering Protocol or the Practice Direction as applicable, then decide whether to instruct recovery, adjudicate, or issue a claim with your own lawyers. We do not issue proceedings.
Will Debt Collection UK take my construction invoice to court?
No. We introduce B2B files to independent partner agencies. We are not solicitors, not FCA-authorised, and we do not conduct litigation. You remain the creditor and you authorise any next step.
Is recovery free on a no-collection, no-fee arrangement?
No. Partners usually charge a fixed percentage / commission of recovered sums (often no-collection, no-fee), agreed before they start. The guide is free; recovery is not free and is not guaranteed.
This guide is free. Instructing a partner to recover an overdue construction invoice is not: fees are usually a fixed percentage of what they recover (often no-collection, no-fee), agreed before they start. When chasing has stalled, pass the file via unpaid invoices or business debt collection.