A new charter setting out supply chain payment terms of 30 days has been agreed by a government construction body.
The Construction Supply Chain Payment Charter has been backed by the Construction Leadership Council, (CLC), the body charged with delivering the government’s industrial strategy for construction.
The charter, published on 22 April, sets out eleven fair payment commitments. These include a commitment to reduce payment terms to a supply chain to 30 days with effect from January 2018. Payment times in the run-up to that date are to be set at 60 days with immediate effect and reducing to 45 days from June 2015.
Other commitments include not to withhold cash retentions, not to delay or withhold payment, and to make payments electronically.
Any organisation that becomes a signatory to the charter agrees to apply the fair payment commitments in its dealings with its supply chain and to be monitored for compliance purposes. Companies represented on the CLC that have agreed to sign up to the charter include Barratt Developments, BritishLand, Kier, Laing O’Rourke, and Skanska.
Kevin Louch, president of the National Specialist Contractors Council said: “Many within the industry, and not just specialist contractors, want to see 30-day payment terms on all construction projects, but we recognise that it will take time for large businesses to adjust their business models over the next few years.
“Many clients already pay in 30 days and we would like them to make public their commitment to the new payment charter and give the industry the confidence to pass that payment through the supply chain to those delivering their projects on site.”
Palmers’ Construction Law team can provide comprehensive advice and guidance to construction companies on all aspects of construction law, including advising on and drafting contracts and other agreements that can help disputes over payment and other issues arising at a later stage.