28 October 2016

Payment Initiatives Make Progress

Central government is taking action to speed up payment throughout the supply chain on public sector contracts, while the Construction Supply Chain Payment Charter continues to gather pace. 

Over 400 central government departments and agencies have a commitment to pay at least 80% of undisputed invoices within 5 days, with the remainder paid within 30 days. The majority of central government departments exceed this commitment, with performance against the target published every three months.

The Public Contracts Regulations 2015 extend this commitment to the supply chain, mandating that 30-day payment terms are implemented down the supply chain on public sector contracts.

It has long been recognised that construction has a payment problem and the Construction Supply Chain Payment Charter sets the benchmark for best payment practice within the industry. Construction companies are increasingly signing up to demonstrate their commitment to prompt and fair payment and Build UK Member signatories, including Mace, Osborne and Skanska, can be found on the Build UK website.

The new Duty to Report legislation comes into effect from April 2017 with large companies required to publish their payment performance every six months. Confirmation of the exact requirements are anticipated next month, with full guidance expected in January. Build UK will be working with members to interpret the legislation for construction so that those members classified as ‘large’ report on the same terms.

The commitment shown in the public sector coupled with the Construction Supply Chain Payment Charter and Duty to Report provides a powerful set of vehicles for tackling the industry’s payment challenges.