Second high street bank to offer construction industry a central payment system
Barclays Commercial Bank today launched its project bank account for the construction industry.
The launch of the account, which has been developed with consultant Rider Levett Bucknall, was held at the House of Commons and received the backing of the SEC Group and the Highways Agency among others.
It comes after the Office of Government Commerce recommended the use of project bank accounts in its Fair Payment Guide to public sector clients. The OGC said project bank accounts could reduce tender costs by 2.5%.
The OGC has also indicated that project bank accounts might be used on £16bn Crossrail scheme in London.
Project bank accounts allow the supply chain to receive payment from a single central account rather than through the main contractor. They are supposed to lead to increased transparency and cost efficiencies and put an end to poor payment practices.
Peter Day, Director, Barclays Commercial Bank Business Services, said: “Barclays is pleased to launch this new account which will enable a more streamlined and fair payment process at a time when businesses are even more focused on their cash flow. Simple and transparent, this account could herald a step change in the culture and practice of the industry and encourage growth.”
Brian Kilgallon, Partner, Rider Levett Bucknall, said: “This is a win win situation for all parties as project bank accounts will lead to improved trust and collaboration, which results in better value for money, better productivity and fewer disputes.”
The Bank of Scotland, the only other high street bank to offer project bank accounts, launched a similar product in January.
How the project bank account works
- It is operated under the joint authority of the client and the main contractor on behalf of all parties including sub contractors.
- Upon certification of stage payments under the contract, funds paid into the account are electronically transferred to the ultimate beneficiaries.
- An account bank agreement also underpins the account, ring-fencing the funds from an administrator.