How To Credit Check A Contractor Or Client Before You Start Work
On most construction jobs, you're funding the work for weeks before the first payment arrives, and sometimes for months before the last. That makes who you're working for one of the most important decisions you'll make on a project. A few minutes of checking before you agree terms can save a lot of chasing, and a lot of risk, later.
In short: to credit check a contractor or client, confirm who is actually paying you, review their public record on Companies House, check for county court judgments and insolvency notices, and run a credit check through Glenwood's credit checking platform for a fuller picture of their risk. Then set your terms to match the risk, and re-check as the project goes on.
Why Checking Matters More In Construction
Construction work is paid for in stages, over long projects, through chains of contractors and subcontractors. If a company further up the chain fails, the businesses below it often feel it first. And because work is usually done before it's paid for, you're extending credit from day one.
Credit information on limited companies is publicly available, so you don't need a company's permission to review its public record. This guide focuses on limited companies. Sole traders and partnerships are different, because personal information is involved, so they need more careful handling.
Step 1: Confirm Who Is Actually Paying
Before anything else, be clear about which company is responsible for paying you. On a construction project that might be the main contractor, a client, or a company set up specifically for the project. Check the registered name, registration number and status, and make sure they match your contract.
Project-specific companies can be newly formed, with little or no trading history to assess. That isn't automatically a problem, but it's a reason to look harder at who stands behind them.
Step 2: Review The Public Record
Companies House offers free access to company information, including filed accounts, director details, registered charges and insolvency records. Look for:
Accounts and filings: are they filed on time? Late filings can be a warning sign.
Financial health: do the accounts show persistent losses or very thin liquidity?
Charges: registered charges show lenders who may rank ahead of you if things go wrong.
Directors: frequent changes, or links to previously failed companies, are worth a closer look.
Step 3: Check For Judgments And Insolvency Notices
County court judgments (CCJs) are held on a public register maintained by Registry Trust, which you can search by company name or number. A judgment suggests a debt went unpaid and had to be pursued through the courts.
It's also worth checking The Gazette for insolvency notices, such as winding-up petitions. A petition against a company is a serious sign of distress.
Step 4: Check How Large Contractors Actually Pay
Large UK companies are required to publish details of their payment practices, including the average time they take to pay supplier invoices. If you're about to work for a large contractor, that information is worth reading. It shows how the company pays in practice, not just what its contract says.
A business that has signed up to the Fair Payment Code is also publicly showing its payment performance tier, though as we've covered elsewhere, that code is voluntary.
Step 5: Run A Credit Check With Glenwood
The public registers show you what a company has filed and what has been recorded against it. A credit check goes further, giving you a clearer view of the company's financial position and risk in one place, so you can decide whether to take on the work, and on what terms, with more confidence.
Glenwood has its own credit checking platform, built with the construction industry in mind, so you can check a contractor or client before you start work without needing a separate provider. Navigating the intricacies of the construction sector requires foresight and knowledge. Our credit checking service, tailored specifically for our industry, provides you with detailed and actionable insights. With our specialised credit reports and real-time monitoring system, you're not just relying on generic data but on nuanced information curated for the construction world.
Run a credit check with Glenwood
Step 6: Turn What You Find Into Terms
A check is only useful if it changes what you do. Depending on the result, you might:
Shorten application and payment cycles, so less work is unpaid at any time
Ask for payment up front for materials on larger orders
Request a parent company guarantee where the paying company is a newly formed project vehicle
Set a limit on how much work you'll do before payment is received
Decline the work
Keep Checking As The Project Runs
A client's position can change during a project, so a check done at the start may be out of date by the final account. Re-check at key points, and treat any change in payment behaviour as a signal to look again. If a reliable payer starts paying late, or a main contractor's position changes, it's worth acting early.
What If They Still Don't Pay?
Even a clean check is a guide, not a guarantee. If an invoice or retention has gone overdue and the client has gone quiet, acting early gives you the most options. Specialist construction debt recovery can help you recover what you're owed. And to check contractors and clients before you start work in the first place, you can use Glenwood's credit checking platform.
FAQs
How do I credit check a contractor in the UK? Look the company up on Companies House for its accounts, directors, charges and insolvency records, search for CCJs, and run a credit check through Glenwood's credit checking platform for a fuller view of their risk.
Do I need a client's permission to credit check their company? For limited companies, credit information is publicly available, so you don't need permission to review it. Sole traders and partnerships are different because personal data is involved.
How can I check how a large contractor pays its suppliers? Large UK companies are required to publish their payment practices, including average time to pay invoices, so this is worth reading before you agree terms.
What if the paying company is new, or a project-specific company? That isn't automatically a problem, but with no trading history to assess, you may want extra protection, such as shorter payment cycles or a parent company guarantee.
Is a credit check a guarantee I'll get paid? No. It's a guide to risk. It helps you set sensible terms, but it can't promise a client will pay on time.
