Business finance for builders & general contractors

Why builders run short of cash mid-project

Construction is one of the most cash-hungry trades in the UK. You buy materials and pay subcontractors at the start of a job, but you don't get paid until a stage is signed off — and even then, payment terms of 30, 60 or sometimes 90 days are normal further up the contract chain.

Three pressures stack up at once:

• Front-loaded costs. Timber, aggregates, steel and plant hire are paid for early, often on supplier accounts with tight terms.
• Stage payments. Valuations and applications for payment take time to certify, so money arrives in lumps, not a steady flow.
• Retentions. Typically around 5% of each contract is held back, half until practical completion and half until the end of the defects period — money you've earned but can't spend.

A profitable contractor can still run dry simply because the cash is locked in work already done.

What builders typically use funding for

Short-term finance is usually about timing, not rescuing a failing business. Common uses include:

• Buying materials up front to lock in prices or hit a delivery slot, especially when supplier lead times are long.
• Paying subcontractors and PAYE/CIS on time while you wait for a valuation to be certified.
• Taking on a bigger contract that needs more working capital than your current cash position allows.
• Covering the retention gap so a 5% hold-back on three or four jobs doesn't quietly drain your account.
• Bridging a slow payer when a main contractor stretches terms beyond what was agreed.

Used this way, finance keeps you bidding and delivering rather than turning work down for want of cash.

What to weigh up before borrowing

Borrow against a clear payment you can see coming, not against hope. Before you draw on any facility, sanity-check a few things:

• Is the receivable real and dated? A certified valuation or a signed contract is firmer ground than a verbal promise.
• Does the cost of finance fit the margin? On thin-margin groundwork or fit-out jobs, a short, sharp facility works better than long-term debt.
• What happens if a client disputes the final account? Retentions and snagging can delay payment, so leave headroom.
• Are your terms matched? If you pay suppliers in 30 days but get paid in 60, that 30-day gap is exactly what working capital exists to cover.

This is educational information, not financial advice — judge each facility against your own pipeline.

How short-term company finance fits

Credicorp lends short-term working capital to the UK limited company — not to you as a director. There's no personal guarantee, so your home and personal assets aren't pledged against the facility. For builders and general contractors, that matters: construction is cyclical and project outcomes vary, so directors are understandably wary of signing away personal security to fund a single job.

A short facility is designed to be drawn when you need to buy materials or pay subcontractors, then repaid as stage payments and retentions land. If your cash need is steady rather than one-off, a revolving option like Credicorp Flex lets you draw and repay across several jobs. You can register to apply as a company.