A company that doesn't fail is not a company that pays

Falling insolvencies do not mean trade credit providers are being paid more reliably. Insolvency statistics count formal company failures. They do not count the customer who stays open and pays at 75 days instead of 45, part-pays an invoice, or raises a dispute that buys three weeks.

This is not another argument that insolvency figures arrive too late. It is that failure figures measure something different from the risk sitting in a supplier's ledger. Formal failure crystallises the exposure. A stressed customer can absorb a supplier's cash for months before that point, and may never formally fail at all.

Why falling insolvencies do not mean lower trade-credit risk

Company insolvencies in England and Wales came to 1,931 in July, up 5% on June and down 5% on July 2025. That is the fourth month running in which the annual comparison has stayed negative.

Construction did not follow. It recorded 343 of those failures, up 3% on June and up 3% on July 2025, against a national total that fell year on year. Over the twelve months to June, construction accounted for 17% of all cases where an industry was recorded, the largest share of any sector.

So the aggregate improved and the sector many trade credit providers are most exposed to did not. That alone should make a supplier cautious about reading the headline. The more useful point is about the companies that appear in neither number.

What financial stress looks like before failure

Merchant sales show it. Like-for-like value across UK builders merchants was flat at −0.1% year on year, while like-for-like volumes fell 5.8%. Higher prices accounted for the difference.

The ledger can therefore show flat sales value while the underlying market is contracting. That does not prove an individual customer is weaker. It does mean that last year's turnover comparison can conceal how much less activity is supporting the same monetary exposure.

On 19 August the Builders Merchants Federation and the Construction Products Association wrote jointly to the Housing Secretary, arguing that the sector does not have a supply problem, it has a demand and confidence problem.

None of that is an insolvency. All of it is pressure that has to go somewhere, and suppliers are where a good deal of it goes. The Build UK payment performance table, refreshed on 21 August 2026, shows the range: among the materials suppliers listed, average days to pay runs from 30 to 63, and the share of invoices not paid within agreed terms runs from close to nil to over 40%.

Three states of a stressed customer

Most credit processes recognise two states: the customer is fine, or the customer has failed. There is a third, and it is where the money goes.

• Paying normally. Orders, terms and behaviour are consistent with the limit you set.
• Surviving by stretching suppliers. The company is trading, may well recover, and is funding part of itself out of your terms. Payments arrive later. Invoices get part-paid. Disputes appear at the end of the month rather than the day the goods arrived.
• Formally failing. Administration, liquidation, a winding-up petition. Your exposure is now a claim.

State two is not evidence of state three, and this is the part worth being careful about. A customer paying you later has not necessarily started down a road to insolvency. Plenty of businesses stretch terms for a quarter and come back. What it does mean is that you are financing them for longer than you agreed to, on terms nobody renegotiated and nobody is paying you for.

Insolvency statistics only ever count state three.

What to do with a falling number

Treat the national figure as context, not comfort. Then watch the things that move inside state two, which fall into two groups and can both be watched continuously.

What you already own. Payment drift, invoice date against payment date month over month, part-payments, the timing of disputes, order frequency and order size against limit utilisation rather than turnover, and whether exposure to one sector has grown while nobody was repricing it.

What the public record tells you. County court judgments, charges, director and shareholder changes, late or amended filings, winding-up petitions and group restructures.

Those changes, not the next insolvency release, should determine when an account is reviewed.

The failure count will keep falling or rising, and it will keep being reported as the state of the market. It is not. It is the closing balance on the businesses that ran out of room. What a supplier loses is lost earlier than that, in the long ordinary stretch where a customer is still trading, still ordering, still answering the phone, and quietly using your terms as working capital.

Insolvency statistics count the companies that stopped. Your ledger is full of the ones that didn't.

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