The news comes after ProjectPay obtained public funding from the UK Government’s innovation division, Innovate UK, in January 2025. At that time, the company was appointed to conduct research and test how to solve cashflow issues in the construction industry. Now, ProjectPay published its findings, with the report being provided to the Government. Additionally, the report comes amidst a period of building levels falling in the region and companies not having the confidence to invest.
Particularly, small and medium-sized enterprises (SMEs) tend to face more difficulties, with more of them not being able to continue to operate. This could lead to a stop in the Government’s building expansion plans. Also, 98% of the construction sector is constituted by SMEs and both these companies and tier-one contractors consider it rather challenging to offer projects due to many organisations collapsing. The UK’s Government underlined its commitment to supporting SMEs by facilitating their growth, aiming to address access to finance and payment practices.
ProjectPay’s recent findings showcase that the economic impact of this building expansion could pose difficulties for the sector if insolvency rates are not addressed. The company compared the situation with Australia’s circumstances in 2024 when Government investment caused insolvency rates to scale rapidly to their highest rates on record. Currently, this investment is being analysed due to the negative results it had, and the considerable losses taxpayers faced.
Furthermore, ProjectPay’s report includes the following:
Explanations on how just digitising payments cannot solve the issues present in the sector and how the industry struggles with outdated financial models and banking structures. Also, many SMEs are unable to access low-cost or affordable working capital;
Data on Project Bank Accounts, leveraged by the Government to offer some protections, and how they are ineffective, high-cost, and should be replaced with more advanced solutions;
Recommendations for the Government’s ENABLE Build programme and what changes should be made to address access to capital for SMEs that operate in the sector, not just builders specifically;
Information regarding the regulatory environment in the UK and how it does not do enough to deliver security of payment in the sector compared to other regions.
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