Keep the interim machinery running
An open final account does not pause the monthly payment cycle on sums already due. Keep applying, keep checking the Payment Notices and Pay Less Notices against the clock, and remember the Construction Act still applies while everyone negotiates.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
Why it matters
Once the final account is on the table, it is tempting to treat every payment as part of one big settlement and stop watching the monthly dates. Your main contractor will not make that mistake. Sums already due keep their own notice deadlines and final dates for payment under section 110 of the Housing Grants, Construction and Regeneration Act 1996. A Pay Less Notice, under section 111, is the notice your main contractor must send if it plans to pay you less than it said. Stop applying, or stop checking whether that notice arrived in time, and you quietly give up the right to be paid the undisputed money now. That cash then becomes a bargaining chip against you, and you negotiate while short of it.
How to do it
- Keep submitting applications on the subcontract dates for work done and adjustments agreed, whatever the state of the final account.
- Diarise the Payment Notice and Pay Less Notice deadlines for each application, and check each one on the day.
- Pursue the notified sum on the final date for payment, as normal, wherever no valid notice arrives.
- Keep the disputed final account items in a separate schedule, so the undisputed sums are never held hostage to them.
- Record every late or missing notice; it is evidence for the account as well as for the payment.
Example
Illustrative example. The scenario and figures are invented.
The facts
A subcontractor has submitted a final account of £900,000 against £780,000 certified, and the main contractor has asked for a meeting in 6 weeks. Meanwhile £45,000 of agreed variations has been carried in applications for 2 months without being certified.
What happens
- The subcontractor keeps applying monthly, including the £45,000 of agreed variations, and diarises the notice dates.
- No Payment Notice or Pay Less Notice arrives against the next application by its deadline.
- The subcontractor writes on the final date for payment demanding the notified sum and referring to the Act.
- The £45,000 is paid 10 days later, before the final account meeting takes place.
The outcome
The settlement meeting starts with the undisputed cash already banked. The £75,000 still in dispute is negotiated without an overdue £45,000 hanging over it.
To have this done for you, see our Final Account Claim service.