Late Payments Reform in Construction: What It Means for Quantity Surveyors and the Industry
Late Payments Reform in Construction is set to transform how the UK construction industry manages cashflow, contracts, and supplier relationships.
At Gray Quantity Surveyors, we know how disruptive late payments can be. A single delayed invoice can cause a ripple effect across a project — straining cashflow, delaying works, and putting subcontractors at serious risk. It’s an issue that has plagued the industry for decades, but the UK Government is finally introducing the most significant late payment reforms in 25 years.
These changes will reshape the way payments are handled in construction — and quantity surveyors (QSs) will be central to ensuring they are implemented effectively and fairly across every project.
Why Late Payments Reform in Construction Matters
Construction projects rely on complex supply chains and long-running contracts. When one payment is delayed, everyone feels the impact:
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Subcontractors struggle to pay operatives and suppliers.
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Contractors juggle cashflow instead of focusing on project delivery.
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QSs are left adjusting forecasts, issuing notices, and managing disputes.
Government figures show late payments cost the UK economy over £11 billion each year and lead to the closure of around 38 businesses every day. With small and medium enterprises (SMEs) forming the backbone of most construction supply chains, the industry has been particularly exposed.
The Late Payments Reform in Construction aims to address these long-standing challenges by promoting fairness, transparency, and accountability at every level of the payment chain.
What’s Changing Under the New Reforms?
The government’s Plan for Change introduces several key updates that will impact contractors, developers, and quantity surveyors alike:
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New Legal Powers
The Small Business Commissioner now has the authority to conduct spot checks, enforce invoice verification within 30 days, and issue multi-million-pound fines to repeat offenders. -
Maximum Payment Terms
Payment terms will be capped at 60 days, with a goal to reduce this further to 45 days. This gives QSs firmer ground when drafting and enforcing JCT or NEC contracts. -
Mandatory Interest on Late Payments
If payments are delayed, interest and financial penalties will apply automatically. This strengthens QSs’ ability to protect subcontractors and suppliers from financial risk. -
Board-Level Accountability
Large firms must have their audit committees review supplier payment practices, turning late payment compliance into a governance issue rather than just an administrative task.
These reforms introduce a culture shift where prompt, fair payments become the expectation — not the exception.
When Will the Reforms Take Effect?
The government’s timeline is already underway:
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Now – October 2025: Government consultation period (construction professionals, including QSs, are encouraged to respond).
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1 January 2026: New reporting rules for large firms begin.
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19 January 2026: Key reforms — including payment deadlines, penalties, and board oversight — come into full effect.
By early 2026, the Late Payments Reform in Construction will be legally enforceable, reshaping how cashflow is managed across the sector.
What This Means for Quantity Surveyors
For QSs, these reforms are far more than just legislative changes — they are practical tools to strengthen project control and financial certainty.
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For PQSs (Client/Developer Side):
Clearer payment frameworks help protect project budgets, prevent supply chain disruption, and build stronger relationships with contractors. -
For Contractor-Side QSs:
Stricter payment rules reduce the pressure of chasing late-stage payments and managing disputes. They also give contractors confidence in planning resources and timelines. -
For the Industry as a Whole:
The Late Payments Reform in Construction establishes a fairer playing field where timely payments are the norm — supporting stability, trust, and long-term collaboration across projects.
By proactively aligning contracts, payment applications, and financial reporting with the new rules, quantity surveyors can ensure compliance while improving project performance.
How Quantity Surveyors Can Prepare
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Review Existing Contract Templates:
Update payment terms, interest clauses, and verification procedures to align with the new legal requirements. -
Strengthen Cashflow Forecasting:
Use reliable cost data to anticipate potential payment delays and protect working capital. -
Educate Clients and Teams:
Communicate how the Late Payments Reform in Construction will affect projects, and advise on best practices for compliance. -
Monitor Supply Chain Health:
Ensure subcontractors and suppliers are paid promptly to maintain productivity and morale on site. -
Collaborate with Legal and Finance Teams:
Work closely with these departments to implement interest clauses, reporting systems, and penalty management processes.
Final Thoughts
As Keir Starmer stated, late payments are “unfair, exhausting, and holding Britain back.” For construction professionals, they also threaten project delivery and profitability.
The Late Payments Reform in Construction offers a real opportunity to reset — building a culture of fair, timely payments that benefit everyone from subcontractors to developers.
For quantity surveyors, this reform reinforces the importance of transparency, proactive contract management, and accurate cost control. By understanding and applying these new standards, QSs can strengthen trust, improve financial stability, and help ensure projects stay on track.
At Gray Quantity Surveyors, we’re working closely with our clients and partners to ensure these changes are understood, implemented, and used to keep projects running smoothly.
If you’d like expert guidance on how these reforms could impact your next project, we’re here to help.
📧 info@grayquantitysurveyors.com | 📱 07841 039673