What are the signs a builder is going broke?
Builders rarely collapse without warning; the warning is just in places subcontractors don't look. From the contracts desk the sequence is predictable: payment schedules come back shorter with thinner reasons, the 'we'll sort it next month' conversations start, retention is held past its trigger, a new all-assets security appears on the PPSR, winding-up applications show up in the court lists and are quietly withdrawn, and the good trades leave. Any one of these is a reason to tighten your own paperwork. Three together is a reason to stop extending credit.
The signs in your own paperwork
The first signal is your payment schedule. A builder under pressure schedules short and explains less: 'under assessment', 'subject to client approval', 'back-charge pending', 'amount to be confirmed'. Each is a way of holding money without saying no. The second is the due date. Payment arrives a few days late, then a week, then with a request to re-lodge the invoice through a new portal. The third is retention: the trigger passes and the release request goes unanswered.
None of these is proof. All of them are what I saw from inside a builder's contracts department in the months before a collapse, and the subcontractors who read them as information rather than inconvenience were the ones who got out with less unpaid.
The signs in the public record
A winding-up application in the Supreme or Federal Court list means a creditor went to court to be paid. One that was later withdrawn usually means that creditor got paid; the question is who is next. A new 'all present and after-acquired property' registration on the PPSR by a lender you have not heard of can mean the builder is borrowing against everything it owns, and secured creditors are paid before you. A string of adjudication decisions against the builder in Queensland's register, especially with nil schedules against large claims, shows a builder choosing not to pay rather than disputing in good faith.
Trade press and local papers often run the story months before any register records it: a stalled site, unpaid trades, union action, a director whose previous company failed.
What to do when you see them
Claim on every reference date. Follow up on the due date in writing. Do not carry a builder past one unpaid claim; suspend if you have to, with the notice your state's Act requires. Register your interest in unfixed materials on the PPSR. Ask in writing where your retention is held. And ring two other trades on the builder's jobs: no register is as current as the trade who was short-paid last month.
Run the registers in a minute with Builder Check, free, at review.theconstructioncontracts.co/builder-check, and add the builder to Builder Watch to be emailed if its ASIC status changes.
Know where your contract stands
Clause-by-clause risk report against your state's Security of Payment laws in about two minutes.
Scan my subcontract freeCommon questions
Is a late payment on its own a warning sign?
One late payment is a Tuesday. A pattern of late payments with shrinking reasons, or a request to re-lodge claims so the clock restarts, is a signal. Treat it like one and keep your claims and notices tight from that month on.
Can I ask the builder directly?
Yes, and you should: where is my retention held, why was this claim short-scheduled, which entity am I actually contracting with. The answers matter less than whether they arrive in writing. A builder that will not put it in writing has answered.
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General information for Australian subcontractors, not legal advice. Statutory deadlines and details vary by state and change over time; verify them before relying on them. Written by Mat Kennedy at The Construction Contracts Co.