Applications for Payment
No matter which type of contract that your organisation uses with individual clients, Applications for Payment (AfP) are absolutely necessary for all levels of the supply chain involved in a construction project. Contractors and subcontractors alike, in order to get paid ina timely and fair fashion from their respective clients. Please click here for our selection of NEC tailored excel templates for download. This blog conducts a brief overview at how the process can be managed in an organisation ofany size, so each job is captured, applied for, assessed, and ultimately paid on time. In the UK,it is the law that interim payments are made to all parties within a construction contract that has a duration of more than 45 days. Because of this, most payment schedules will run on a monthly cycle. Generally, the burden of responsibility will be upon the contractor or subcontractor to submit their applications on the outlined date each month for the projects they are working on, along with the necessary back-up stipulated by the particular contract they entered into. Once submitted to their respective clients, the client will have a set amount of time to assess the application made, this is usually around 2 to 3 weeks. After an assessment has been made, an invoice request is generally sent out to the contractor along with any necessary withholding notices. A withholding notice is a document which details the reasons for any underpayment versus the original application value. This can be for a huge number of reasonssuch as: · Lack of or insufficient back-up to substantiate the value of the application. · If the payer has suffered any loss or expense as the result of the payee’s actions. · Damage to materials. · Or something more significant such as failure to complete the agreed works on site. Whatever the reason this scenario occurs, the payee should provide robust and clear explanations behind costs withheld. Ideally, the client would then give the member of the supply-chain the ability to re-apply for these costs the following month if they are able to provide sufficient evidence against the assessment. Once the assessment has been received,an invoice will need to be raised for the agreed amount in order for payment to be made on the date that is set out within the contract.
