Fair and transparent payment practices are essential for successful,
integrated working on construction projects.
The Construction Supply Chain Payment Charter
The Construction Supply Chain Payment Charter’s ambition for 2025 is that the construction industry's standard payment terms are 30 days and that retentions are no longer withheld.
This Charter applies to all parties to construction contracts, with the aim of helping to create a more collaborative culture and ensure a strong, resilient and sustainable supply chain.
By becoming a signatory to this Charter, an organisation agrees to apply the fair payment commitments in its dealings with its supply chain, to be monitored for the purposes of compliance by reporting against a set of agreed key performance indicators (KPIs), and to consider the performance of its supply chain against the agreed KPIs when awarding contracts.
The Prompt Payment Code (PPC) sets standards for payment practices and best practice.
You must be a signatory to the PPC before you can apply to become a signatory to the Construction Supply Chain Payment Charter.
Code signatories undertake to:
Pay suppliers on time
Give clear guidance to suppliers
Encourage good practice
For more information about implementing the Construction Supply Chain Payment Charter, see this guide from Build UK.
Department of Health and Social Care - ProCure22 Framework: Delivering the objective of Prompt Payment
This document gives an overview of the processes and procedures that are applied under the Dept of Health ProCure22 National Framework Agreement (P22 NFA) to support the policy of prompt payment of Construction Suppliers (Principal Supply Chain Partners (PSCPs)) and those within their Supply Chains.
Project Bank Accounts
A project bank account (PBA) is a ring-fenced bank account set up to directly pay suppliers, throughout the supply chain, on a construction project.
The client and the main contractor are generally the trustees of the account and control the movement of monies. The beneficiaries of the account are those suppliers who are working on a specific project.
A PBA enables all suppliers to be paid at the same time and within the same timescales, without changing any traditional contractual responsibilities.
The Construction Alliance have provided the following guide which explains more about the benefits and challenges, and how to set up a PBA.