Getting Paid in Construction: The Small Print That Controls Cash Flow

Part II of the Housing Grants, Construction and Regeneration Act 1996 provides important payment and adjudication rights for qualifying construction contracts in England, Wales and Scotland. Northern Ireland has the Construction Contracts (Northern Ireland) Order 1997, as amended, and its own Scheme. [1,2]

Do not assume that every transaction involving a building is covered. The legislation defines construction contracts and operations and contains exclusions. Contracts with a residential occupier are an important example; that does not mean every subcontract on a domestic property is exempt. Check the actual parties, agreement and operations.

If required contractual provisions are missing or non-compliant, the relevant statutory Scheme can supply replacement terms. England and Wales, Scotland and Northern Ireland have distinct Scheme instruments. A template copied from a different jurisdiction may create avoidable uncertainty.

The application date is when the contract requires the contractor or subcontractor to submit its claim for payment. The application should identify what is claimed and the basis of the calculation.

The due date is the contractual point at which the payment becomes due. It is not necessarily the day money must arrive.

The notice deadlines govern the relevant payment notice and, where applicable, a pay less notice. The correct notice, amount, basis, recipient and service method matter.

The final date for payment is the deadline for paying the relevant sum. Treating every construction invoice as automatically payable after a universal 30-day period is a mistake. Establish the applicable contract, legislation and any replacement Scheme provisions. [1]

Make one payment calendar at the start of the contract and assign an owner to each action. Keep evidence of submission and receipt. Check whether an online portal is mandatory and how late submissions, weekends and holidays are treated under the actual terms.

A VAT invoice serves a tax and accounting purpose. Whether it also satisfies a contractual application or statutory notice requirement depends on its content, timing and the relevant mechanism. Calling a document “invoice” or “payment notice” does not settle the question.

Similarly, a general complaint about defects is not automatically an effective pay less notice. The statutory payment process can require payment of a notified sum even while the underlying valuation is disputed. Missing the payer’s notice deadline does not, however, automatically make every informal demand a valid notified sum. [1]

In a fictional example, a subcontractor emails a figure without identifying the period or explaining the valuation, then assumes that silence creates an unquestionable entitlement. The safer working practice is to prepare a clear application under the correct mechanism and obtain advice promptly if a notice is missed or disputed.

When the work changes, record who instructed it, whether that person had authority, what changed, the likely cost and programme effect, and what notice the contract requires. Retain drawings, measured quantities, labour records and relevant correspondence.

A conversation on site may establish that something happened, but it can leave the parties arguing about scope, authority and price. Confirm instructions through the agreed process while the facts are fresh. A photograph of completed work may support the record; it does not alone establish an agreed valuation.

Before signing, also check document priority, set-off provisions, retention, release conditions, final-account deadlines and dispute procedures. Price is only one part of commercial risk.

As checked on 8 October 2026, Parliament lists the Commercial Payments Bill as a Bill. Its proposals include a construction-retention ban and wider payment reforms. That is not evidence that every retention clause is already unlawful or that a future ban has commenced. The final legislation, territorial extent, commencement and transitional provisions will matter. [3,4]

Until an applicable change takes effect, manage the current agreement and law. Record the retention percentage, cap if any, release events, expected dates and evidence needed. Do not treat a retention as the same thing as a warranty, a tax deduction or an unrestricted fund for any complaint.

For qualifying late commercial debts, statutory interest is generally eight percentage points above the Bank of England base rate, subject to the legislation and any contractual remedy that displaces it. It is not simply a flat 8% charge. Check entitlement and calculation before demanding it. [5]

For qualifying construction contracts, adjudication can provide a rapid dispute route. The usual statutory decision period is 28 days from referral, subject to permitted extensions. A decision is binding unless and until the dispute is finally resolved through the relevant route. It is not a promise that every dispute will produce cash within 28 days of the first complaint. [1,2]

“We have not been paid, so we cannot pay you” is not generally a valid pay-when-paid condition under the construction legislation, although a narrow insolvency exception exists. Suspension for non-payment also has legal conditions and notice requirements; the GB statutory route includes at least seven days’ notice stating the grounds. Obtain contract-specific advice before stopping work. [1,6]

The site team sees the change first. The commercial team needs the record. Accounts needs the correct information and payment dates. If those people work from different versions of events, the business may lose time resolving a dispute it could have documented clearly.

A practical SKEB approach tests whether staff understand the payment mechanism, can prepare an accurate record, recognise when experience from another contract does not transfer and behave consistently when instructions are unclear. Reward early clarification rather than a large, disputed surprise at the final account.

Good payment management starts when the contract is agreed and continues throughout delivery. The aim is a clear connection between the authorised work, the evidence, the valuation, the required notices and the money received.

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1. Housing Grants, Construction and Regeneration Act 1996, Part II, as amended
2. Construction Contracts (Northern Ireland) Order 1997, as amended
3. UK Parliament — Commercial Payments Bill [HL], current status
4. Government — Commercial Payments Bill overview
5. Government — late commercial payment interest
6. Local Democracy, Economic Development and Construction Act 2009 — construction amendments

Fact-checked against the linked sources on 8 October 2026. Educational overview: project circumstances, applicable amendments and transitional provisions must be checked before decisions are made.