Construction insolvency has been front page news for four years. The headlines tend to focus on big names, but the reality is that most of the companies going under are small: builders doing a few houses a year, and the trades working for them. Here’s what the latest official figures show, why businesses fail, and practical ways to keep your own business liquid.
Key takeaways
- Construction was the most common industry for insolvency appointments in 2025–26, at 24.4% of companies entering external administration from 1 July 2025 to 31 May 2026 (ASIC).
- Total company insolvencies across all industries rose to 14,722 in 2024–25, then eased slightly in 2025–26.
- Most failing construction firms are small businesses, not large builders.
- The main drivers are fixed price contracts, rising costs, cash flow gaps and tax debts.
- Staying liquid comes down to knowing your numbers weekly, claiming on time and fixing problems early.
What do the latest ASIC insolvency statistics show?
ASIC publishes insolvency statistics that count companies entering external administration (such as liquidation, voluntary administration or small business restructuring) or having a controller appointed for the first time. Here are the key figures, with the period each one covers.
| Period | What ASIC reported | Source |
|---|---|---|
| 2023–24 financial year | 2,975 construction companies entered external administration, 27% of the total | ASIC, July 2024 |
| 2024–25 financial year | 14,722 companies (all industries) entered external administration for the first time, up 33.2% from 11,053 in 2023–24 | ASIC Insolvency Update Issue 37, September 2025 |
| 1 July 2025 to 28 February 2026 | 9,307 companies, down 1.3% on the same period of 2024–25; construction 24% of appointments | ASIC Insolvency Update Issue 39, March 2026 |
| 1 July 2025 to 31 May 2026 | 12,819 companies, down 4.6% on the same period of 2024–25; construction 24.4% of appointments, the highest of any industry | ASIC Insolvency Update Issue 40 |
For the full weekly data series, see ASIC’s insolvency statistics page.
Is construction insolvency getting better or worse?
The short answer: slightly better, but still high. The overall number of companies failing each year surged through 2023–24 and 2024–25, and the first 11 months of 2025–26 came in a little lower. Construction’s share has stayed at roughly one in four appointments throughout.
ASIC also compares insolvencies with the number of registered companies. From 1 June 2025 to 31 May 2026 that ratio was 0.38%, below the peaks of 0.56% in 2011–12 and 0.53% in 2012–13 (ASIC). So while the raw numbers are big, a lot more companies exist now than a decade ago.
For a small builder, the trend matters less than the risk in your own supply chain. When a builder or head contractor above you fails, the subbies and suppliers below them are often left unpaid.
Who is going under: big builders or small ones?
Mostly small ones. A Building 4.0 CRC research report (September 2025) on residential construction found that “more than three quarters of construction firms entering insolvency during FY24 had less than 19 Full Time Employees”. The same report found that even experienced directors are affected, pointing to structural problems in the industry rather than just poor management.
Why do builders and tradies fail?
1. Fixed price contracts signed before costs rose
A fixed price contract locks in your price, but not your costs. If materials or labour rise between signing and building, the difference comes out of your margin. The ABS reported that house construction prices rose 2.0% in the June quarter 2026 and 5.9% over the year, with fuel costs, shipping delays and shortages of bricklayers, carpenters and concreters all cited. The National Housing Supply and Affordability Council notes house construction costs are now 51% higher than before the COVID-19 pandemic (June quarter 2026).
2. Cost blowouts and variations
Unexpected site conditions, design changes and unpriced variations add up fast. If variations aren’t signed and claimed properly, you carry the cost.
3. Cash flow gaps
Builders pay for labour and materials weeks before a progress claim is paid, and retention can hold back money for months. The Building 4.0 CRC report identifies rigid progress payment structures and cash flow gaps as a core financial risk for residential builders.
4. Tax debts that build quietly
When cash is tight, BAS and PAYG are often the first bills to slip. The ATO has stepped up collection. In a September 2025 speech, ATO Deputy Commissioner Anna Longley said collectable debt was over $50 billion at 30 June 2025, with small business accounting for $35.9 billion, and that in 2024–25 the ATO issued over 84,000 director penalty notices relating to around 64,000 companies and over 15,000 garnishee notices.
How can a small builder stay liquid?
- Run a 13 week cash flow forecast. Update it every Monday. List every payment and expected receipt, and find your low point before it arrives.
- Price for cost movement. Build realistic contingencies into quotes, and talk to your adviser about rise and fall clauses where they’re allowed.
- Claim on time, every time. Know your reference dates and claim the day each stage is reached. Use your state’s security of payment rights. See our guide on security of payment claims and cash flow.
- Get variations signed before the work. No signature, no start.
- Keep tax separate. Put GST and PAYG into a separate account as money comes in.
- Deal with the ATO early. A tax debt handled early costs less than one that’s reached a director penalty notice. Our page on ATO debt loans for tradies explains how tradies clear tax debts fast.
- Watch your counterparties. Slow payments from a builder above you are an early warning. Don’t keep extending credit.
- Line up funding before you need it. A loan arranged in a calm week is easier than one arranged in a crisis.
- Get advice early. If you’re worried about solvency, talk to your accountant or a qualified adviser now, not later.
Example: A small builder in Ballarat has two fixed price homes where frame and roofing costs have run over. Both jobs are fine on paper once finished, but she’s short on wages for the next six weeks. Rather than let her BAS slip, she uses equity in her investment property for a short term working capital loan, finishes both jobs and repays from the final payments.
How can finance help, and when does it make things worse?
Finance works when it bridges a timing gap to a clear exit: a signed progress claim, a final payment, a property sale. It makes things worse when it’s used to cover ongoing losses with no repayment in sight. Be honest about which one you’re facing.
If a build has stalled because it’s over budget, see construction completion loans.
Key facts about our loans
- Loan size: $20,000 to $5 million, for business purposes
- Property secured: against property you or a guarantor already own; no financials needed; bad credit considered; as little as 24 hours in some cases; terms typically 1 to 12 months
- Unsecured: 6+ months trading with an ABN; sized to turnover; some funded within hours
- Pricing: every loan is priced on your circumstances; we find the sharpest rate available for your situation
Need breathing room?
If your forecast shows a gap, act while you still have options. Check your options in about 60 seconds. It won’t affect your credit score, there’s no cost to enquire, and a lending specialist will call you back. We’ll tell you quickly if we can help.
