Title: Seeking Views on Legislative Measures to Tackle Late, Long and Disputed B2B Payments and Retention Clauses in Construction Contracts

We are seeking stakeholder input on potential legislative measures aimed at improving the efficiency, fairness, and predictability of business-to-business payments, particularly within the construction sector. The focus areas include late payments, prolonged payment cycles, disputed invoices, and the use (or abuse) of retention clauses in construction contracts. This is an opportunity for industry participants, financiers, contractors, subcontractors, suppliers, and their advisers to contribute ideas that could shape a more resilient and transparent payment framework.

Context and rationale
Payment delays and disputes are a persistent feature of many construction supply chains. They can undermine project viability, inflate costs, erode cash flow, and disproportionately affect smaller firms and subcontractors. Retention clauses—where a portion of payment is withheld until project completion or defect rectification—are intended to provide assurance for project quality but can also become a mechanism for cash flow pressure and dispute escalation if misused or poorly administered. Legislative measures could seek to:

– Shorten payment cycles and establish clear, enforceable payment deadlines between businesses.
– Provide efficient, timely, and independent dispute resolution pathways for payment claims.
– Cap or reform retention practices to balance incentives for quality with the need for accessible working capital.
– Enhance transparency around invoicing, variations, and progress payments.
– Establish robust remedies for non-payment, late payment interest, and penalties that are proportionate and enforceable.
– Align construction-specific provisions with broader commercial and administrative law to reduce overlapping or conflicting obligations.

Specific areas for consideration
1) Payment timelines and prompt payment obligations
– Should there be a statutory framework mandating payment within a defined number of days after receipt of a valid invoice (or approval of a progress claim)?
– Should interest or liquidated damages apply automatically to late payment, with set rates or ranges?
– How should cross-border or multi-jurisdictional projects be treated, where payment practices vary?

2) Disputes and interim relief
– What mechanisms are most effective for resolving payment disputes quickly (adjudication, fast-track tribunals, or mediation with statutory speed requirements)?
– Should there be a statutory right to suspend performance in the event of non-payment, with safeguards to prevent misuse?
– How can we incentivise timely dispute resolution without compromising the right to a fair hearing?

3) Retention clauses
– Are existing retention practices fair and proportionate, or do they create undue financial strain?
– Should there be limits on retention percentages, minimum release points, or mandated unconditional release of retentions after a defined period?
– Would a retention deposit scheme or performance bond model provide a more transparent alternative?
– How can retention withholding be transparently tracked and reconciled, including interest on retained funds?

4) Transparency and invoicing
– Should standardised invoicing formats and mandatory supporting documentation be introduced to reduce disputes?
– Could a centralised payment portal or digital ledger improve visibility for all parties?
– What information should be required to accompany each invoice (scope of work, variations, approved changes, milestone status, retention amounts, interest calculations, etc.)?

5) Enforcement and remedies
– What penalties or sanctions should apply for persistent late payment or non-payment (e.g., statutory damages, interest, suspension of capability to bid on public contracts)?
– Should there be a dedicated administrative body or tribunal with clear procedural timelines to enforce payment rights?
– How can costs be allocated fairly in disputes to avoid punitive outcomes for smaller entities?

6) Robustness and coherence with the wider regime
– How should any new measures interact with existing contract law, commercial agency rules, and employee protections in the construction sector?
– What transitional arrangements would be necessary to minimise disruption for ongoing projects?
– How should enforcement be funded and resourced to ensure timely outcomes?

Potential approaches
– A standalone prompt payment act tailored for B2B construction relationships, with defined payment windows, interest mechanisms, and dispute resolution timelines.
– An amended construction contracts act that imbues retention practices with clear limits, release schedules, and accountability measures.
– A digitalisation push, mandating standardised, machine-readable invoices and a shared platform for claims, variations, and payments.
– A hybrid model combining prompt payment legislation with targeted reforms to retention, backed by robust enforcement and practitioner guidelines.

Questions for respondents
– What are the practical barriers you face with current payment practices and retention clauses?
– Which measures do you consider most effective in reducing disputes and improving cash flow, and why?
– What unintended consequences might arise from proposed legislative changes, and how could they be mitigated?
– How should risks and costs be allocated between employers, main contractors, and subcontractors under new rules?
– What transitional period would be appropriate to implement changes without disrupting ongoing projects?

Call for collaboration
We welcome written submissions, case studies, and practical examples that illustrate how payment practices operate in real projects, including any unintended consequences of current arrangements. Responses should aim to balance the needs for timely payment, fair dispute resolution, and the integrity of project delivery. The insights gathered will inform a consultative process with policymakers, industry bodies, and other stakeholders.

Submission guidance
– Please respond with clear, concise evidence-based input.
– Include any relevant data or references to support your recommendations.
– If proposing a specific legislative text or model, provide draft language and rationale.
– Indicate whether you are submitting as an individual practitioner, business, trade association, or other stakeholder.

Timeline and next steps
We expect to collect views over the coming weeks, followed by synthesis and engagement with policy-makers and industry groups. A summary of themes and proposed options will be published to inform subsequent discussions.

In conclusion
Legislative measures addressing late, long, and disputed B2B payments and the use of retention clauses in construction contracts have the potential to improve cash flow, reduce disputes, and create a more predictable operating environment. By sharing practical experiences and thoughtful proposals, stakeholders can contribute to a framework that supports sustainable project delivery, fair risk allocation, and healthy competition within the construction sector.

July 24, 2026 at 09:52AM
延迟支付：解决糟糕的支付行为
https://www.gov.uk/government/consultations/late-payments-tackling-poor-payment-practices
我们正在征求对立法措施的意见，这些措施旨在解决企业对企业之间的延迟、拖延和有争议的支付，以及建筑合同中的扣留条款的使用。

阅读更多中文内容： 促进及时、公正的商业支付与保留条款改革：对拖延、长期及有争议的B2B支付的立法视角