30-Day Payment

In 2010, the Governments in England and Scotland made payment within 30 days throughout the supply chain a contractual requirement on central Government contracts. This means that, if you are working on any project funded by a central Government department you should be receiving payment within 30 days.

• Click here for a list of central Government departments in England

In simple terms, 30-day payment means that payment is received 30 days after the end of a valuation period, which is typically at the end of a calendar month. To achieve this in accordance with the payment provisions of the Local Democracy, Economic Development and Construction Act (the 'Construction Act'), the ‘due date’ should be the same calendar date as the valuation date. The final date for payment (the date on which payment should actually be received) should then be 30 days from the due date.

• Click here to view the Construction Act
• Click here for guidance on getting paid under the Construction Act
• Click here to view the Fair Payment Charter in England
• Click here to view the Scottish Procurement Policy Note

Get your contract right

The best way of ensuring that 30 days means 30 days is to include a schedule of calendar dates in your contract, which establish as a minimum the application, due and final dates for payment. Many contractors already include schedules in their standard terms – unfortunately they tend to be for payment periods of longer than 30 days! Nevertheless they can easily be adjusted to meet the 30-day requirement.

• Click here for a model schedule for 30-day payment

If you are working on a central Government contract and it does not provide for 30-day payment, you should write to the contractor informing him about the Fair Payment Initiative and requesting payment within 30 days.

• Click here for a list of central Government departments in England
• Requesting a review of contractual payment terms – Template letter

If you have your own standard terms and conditions, you should make sure that:

1. Your payment terms specify that payment becomes due on a calendar date or a certain day in the calendar month (e.g. the last Friday) in which the work was carried out
2. The final date for payment is 30 days from that due date.

• Click here for an example clause for 30-day payment

If you are working on a central Government contract and the contractor refuses 30-day payment terms, you can report this to NSCC by clicking on the Fair Payment Feedback Form.

Know your client

There is no point in going to the trouble of establishing 30-day payment if the contractor or client will not have the money to pay you when the 30 days are up!

When you allow contractors and clients time to pay, it should be a conscious decision based on knowledge and you can check their credit worthiness using the following simple methods:

• Credit reports
• Bank references
• Trade references
• Companies House
• Your own records

NSCC also works with Creditlook to provide access to an online credit forum which enables companies to exchange information about contractors and clients trading outside of agreed payment terms.

• Click here to visit Creditlook

If you consider a contractor or client a risk, you can improve your likelihood of getting paid by insisting on payment upfront or requesting a Director’s personal guarantee or a parent company guarantee.

Getting Paid on Time

Once you have agreed your entitlement to be paid within 30 days, there are a number of things that you can do to increase your chances of actually getting your money on time.

• Submit applications on time – To ensure that an application is paid promptly, it is advisable to show your payment terms clearly on the front, include as much information as possible in respect of the amount claimed and submit it on time
• Establish a contact for queries – Call your contact within the organisation a week before your account is due to be paid to make sure that your payment is in the system – this will give you time to resolve any problems before the payment becomes late
• Pay by BACS – By switching to BACS for making and receiving payments, you can do away with the excuse that 'The cheque is in the post' forever!

• Requesting payment by BACS from contractors and clients – Template letter
• Notifying suppliers of payment by BACS – Template letter
• NSCC’s Top 10 Tips for Getting Paid on Time

Chasing Payment

Regardless of how much effort you make to get paid on time, it is inevitable that payment will sometimes be late and commercial reality dictates that you should try to deal with it amicably where possible. If you have not been paid in full by the final date for payment and no withholding notice has been issued, write to the contractor requesting immediate payment.

• Chasing overdue payment – Template letter

Next Steps

If payment is not forthcoming in spite of all your efforts, there are a number of options you can consider and NSCC members have access to a free legal and contractual helpline – contact NSCC for further information.

• Suspension of work – If you are certain that the final date for payment has passed and no notice of intention to withhold payment has been issued, you can issue notice of your intention to suspend work until payment is received.
• Adjudication – Once you have exhausted negotiations, you can go to adjudication to obtain what you are owed by referring the dispute to the adjudicator or Adjudicator Nominating Body (ANB) named in your contract. If your contract does not name an adjudicator or ANB, you can approach the Association of Independent Construction Adjudicators (AICA) and NSCC Specialist Contractors will receive a free nomination –
  www.aica-adjudication.co.uk.
  • NSCC's Top 10 Tips for Adjudication
• Court – You can use the Small Claims Court to recover debts under £5,000 and the County Court for debts up to £5150,000 – www.hmcourts-service.gov.uk. The Small Claims Court in Scotland can be used for debts up to £53,000 and there is no County Court procedure – see www.scotcourts.gov.uk.

If you are working on a central Government contract and the 30-day payment requirement is not being complied with, you can report this to NSCC by clicking on the Fair Payment Feedback Form.