With the construction industry shifting from traditional, linear processes to highly integrated, data-driven and multidisciplinary project execution, finance professionals are under heightened pressure to meet tight deadlines, maintain contractual fidelity and ensure financial prudence
To shine a spotlight on the challenges they’re facing, application for payment software provider Payapps surveyed senior financial leaders across the UK. The results emphasise the challenge of using traditional, fragmented systems and the importance of leveraging technology to meet the evolving role of construction finance.
Intensifying demands placed on finance teams in construction businesses mean the role is as much about control and confidence as it is managing productivity and efficiency across high-volume subcontractor payments and mitigating risk across compliance and cashflow.
However, it is clear the size of finance teams isn’t scaling with these heightened demands. Results show construction organisations manage around 210 subcontractors on average – but just 5 people work in their subcontractor ledger or finance teams. This perhaps explains why 46% of respondents state an increased workload is the biggest challenge they face.
The drive to increase transparency
With the construction industry accounting for nearly one in five UK insolvencies and around 70% of firms across the built environment reporting regularly being paid late, the Fair Payment Code (FPC) was introduced to combat the rising number of late payments and increase accountability. While entirely voluntary, 71% of those surveyed indicate their companies are signatories of the FPC, with supply chain risk the key driver behind this commitment.
However, results show the maximum proportion of invoices paid within 30 days is 80% and just 15% of those surveyed pay more than half of their invoices within this period. This indicates that none of the respondents who are signatories would qualify for the FPC’s Bronze, Silver or Gold awards, which require a contractor to pay at least 95% of invoices to small businesses within 30 days – perfectly illustrating the scale of the challenge facing the industry.
Disputes and adjudications
Adjudications remain a major hurdle for finance professionals in the construction industry, with King’s College London reports revealing 2,264 adjudication referrals were placed in 2024 – a 9% increase on the previous year.
This is reflected by the survey, with respondents reporting an average of 7 subcontractor adjudications over the past 3 years, and average legal costs of around £2m.
Notably, just over a fifth of respondents indicate that:
- outdated systems and processes
- reporting on payment practices
- the risk of adjudications are the three biggest payment challenges they currently face – highlighting the critical role of digital transformation in better management of applications for payment.
Wasted administrative time
Respondents report spending large portions of their working weeks on administrative tasks, with managing self-billing agreements, inbound payment enquiries and subcontractor insurances each accounting for an average of 17 to 18 hours per week. Furthermore, respondents state processing applications for payment typically consumes 16 to 20 hours per week, heightening concern about the amount of time taken to manage subcontractor payment applications and day-to-day enquiries.
Regulatory risk caused by limited visibility
Limited visibility of subcontractor payment obligations can open businesses up to regulatory and financial risk.
Concerningly, only one-fifth of all respondents said they have total visibility over payment applications before they are approved by commercial teams. More alarming is the statistic that 22% had little or no visibility at all.
Consequently, almost two-thirds of respondents are concerned about limited visibility into cash requirements for subcontractor payment applications and its impact on cashflow forecasting.
Legacy tools
Many businesses still rely on manual administrative processes to manage subcontractor payment applications. In fact, half of the respondents use spreadsheets to manage these, with nearly half relying on emails and more than a quarter still using pen and paper.
These fragmented methods risk incorrect payment calculations, ineffective analysis, late payments, wasted administrative time and an increased chance of disputes.
Furthermore, while 2 in 5 respondents report using ERP software, these systems are typically broad financial platforms as opposed to construction-specific solutions. They often lack the functionality required to manage subcontractor payment applications, compliance checks, reporting and approvals in a cohesive way.
A little under half of respondents (44%) use dedicated subcontractor payment software. Therefore, this illustrates a significant opportunity for the majority of businesses to transform their payment practices by transitioning from manual methods to automated technology.
Effective finance strategy relies on technology
The role of technology in data-driven reporting and payment tracking, along with timely identification of financial risk, is highlighted by respondents when asked how subcontractor payment management could be improved.
In fact, 81% believe payment software would make their business more efficient, with 91% stating that technology implementation is important for the improvement of construction processes. 
Furthermore, nearly two-thirds of those not yet using dedicated software say they plan to introduce such technology within the next 6 months.
Meanwhile, almost 9 in 10 of those using Payapps indicate their current processes and systems make it easy to produce accurate reporting on subcontractor payment practices, compared to a little over half of non-technology users.
Purpose-built technology will be critical for the construction industry to quickly adapt to ever-changing regulations and remain compliant.
While three-quarters of all respondents find it easy to meet current regulatory and contractual deadlines and ensure payments remain compliant, only 23% were confident their current payment processes could quickly adapt to internal strategic shifts or external regulatory changes affecting payment timescales.
Investment in purpose-built technology will not only help businesses move beyond fragmented and reactive administration towards more strategic financial management but also empower finance teams to demonstrate better productivity, improve visibility, ensure stronger reporting and compliance, and prioritise prompt payments.
Click here to read Payapps’ Construction Finance – Why Technology is Critical report.
*Please note, this is a commercial profile.
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