Late Payment Issues: Stick To Payment Procedures And Don't Forget Your Right To Adjudicate

Late payment continues to be a scourge on the construction industry and evidence of its debilitating effects abounds both in the industry press and in court reports. A recent article published in Construction News highlighted the bleak statistic that one in four SMEs is at risk of collapse due to late payment (see this Construction News article) and a late payments survey carried out by Textura Europe and shared with Construction News ( click here) found that more than a third of main contractors, sub-contractors, clients and consultants are paid more than 60 days after issuing invoices.

It seems therefore that the payment requirements set out by the Housing Grants, Construction and Regeneration Act 1996 (as amended by Part 8 of the Local Democracy, Economic Development and Construction Act 2009) (the Construction Act) to improve cash flow have been of little help for some although the government's continued efforts to address payment issues are evidenced by various initiatives including:

the Prompt Payment Code1 introduced to improve payment procedures and cash flow; the discussion paper published in February 2015 (" Late Payment: Challenging 'grossly unfair' terms and practices"); the summary of responses to that paper published in June 2015; the launch by the Department for Business, Innovation and Skills (BIS) of a further...